Hank Hands owns a sole proprietorship that charters various types of aircraft. Hank exchanged a helicopter with an adjusted basis of $156,000 used in his business for a smaller helicopter with a value of $142,000. On the exchange, Hank was relieved of an existing loan of $10,000 on the original helicopter and received $4,000 in cash. What is Hank's gain or loss on the trade?
A) ($14,000)
B) $0
C) $4,000
D) $10,000
E) $14,000

Question

Quizplus · Accepted Answer

$0. the amount realized is $156,000 ($142,000 + $10,000 relief of loan + $4,000 cash received) and the adjusted basis is $156,000, so the gain is $0.

Hank Hands Owns a Sole Proprietorship That Charters Various Types