Winston White exchanged business real estate that had an adjusted basis of $16,000 for other business real estate with a fair market value of $15,000 and $4,000 cash. What is Winston's basis in the property received?
A) $12,000
B) $15,000
C) $16,000
D) $19,000
E) $20,000

Question

Quizplus · Accepted Answer

the realized and recognized gain is $3,000 ($15,000 + $4,000 - $16,000). the basis of the new asset is $15,000 ($16,000 + $3,000 recognized gain - $4,000 cash received). Alternatively, the basis is the fair market value of the new asset ($15,000) less the gain not recognized ($0).

Winston White Exchanged Business Real Estate That Had an Adjusted