Dexter Davenport had an adjusted basis of $230,000 in real estate which he held for investment. He exchanged it for other real estate to be held for investment with a fair market value of $210,000, a boat with a fair market value of $45,000 and $15,000 cash. What is Dexter's basis in the real estate and the boat received?
A) Real Estate: $210,000; Boat: $30,000
B) Real Estate: $210,000; Boat: $45,000
C) Real Estate: $225,500; Boat: $45,000
D) Real Estate: $230,000; Boat: $40,000

Question

Quizplus · Accepted Answer

Dexter has a realized gain of $40,000, the diﬀerence between the amount realized of $270,000 ($210,000 plus $45,000 plus $15,000) and the basis of $230,000. the recognized gain is $40,000, to the extent of boot received but not to exceed the gain realized
 the basis of the real estate is $210,000 or $230,000 plus $40,000 gain recognized minus $60,000 boot received (Method 1) or $210,000 fair market value less any deferred gain which is $0 (Method 2). the basis of the boat is the fair market value of $45,000.

Dexter Davenport Had an Adjusted Basis of $230,000 in Real