B exchanges investment land with an adjusted basis of $40,000 for another parcel of investment land with a fair market value of $50,000 plus $12,000 in cash.What is B's recognized gain on this exchange?
A)$12,000
B)$20,000
C)$22,000
D)No gain is recognized.

Question

Quizplus · Accepted Answer

B's recognized gain is the lesser of the realized gain ($22,000) or the boot received ($12,000). Therefore, the recognized gain is $12,000.

B Exchanges Investment Land with an Adjusted Basis of $40,000