Nancy and Tonya exchanged assets.Nancy gave Tonya her personal residence with an adjusted basis of $280,000 and a fair market value of $560,000.The house has a mortgage of $200,000, which is assumed by Tonya.Tonya gave Nancy a yacht used in her business with an adjusted basis of $250,000 and a fair market value of $360,000.What is Tonya's realized and recognized gain?

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C)$110,000 realized and $110,000 recognized gain.Tonya's realized gain is calculated by subtracting her adjusted basis in the yacht ($250,000) from the fair market value of the house she received ($560,000) minus the mortgage assumed ($200,000), which equals $110,000. Since this is a like-kind exchange involving business and investment assets, the gain is recognized and taxed.

Nancy and Tonya Exchanged Assets