Henry Higgins exchanged property with a basis of $100,000 and a fair market value of $125,000 for other similar property with a fair market value of $160,000. He also gave up 100 shares of Bookbinder, Inc. stock worth $25,000 with an adjusted basis of $15,000. What is Henry's realized gain and his recognized gain?
A) Realized gain: $10,000; Recognized gain: $10,000
B) Realized gain: $10,000; Recognized gain: $0
C) Realized gain: $45,000; Recognized gain: $10,000
D) Realized gain: $45,000; Recognized gain: $0

Question

Quizplus · Accepted Answer

the realized gain is $45,000 ($160,000 - $100,000 - $15,000). the recognized gain is $10,000, the excess of the fair market value of the stock of $25,000 (boot given) less the basis of the stock of $15,000.

Henry Higgins Exchanged Property with a Basis of $100,000 and a Fair