A taxpayer that receives boot in a like-kind exchange resulting in a gain recognizes as gain the lesser of the fair market value of the boot received or the gain realized.

Question

Quizplus · Accepted Answer

This statement is true. When a taxpayer receives boot in a like-kind exchange that results in a gain, they must recognize the gain based on the lesser of the fair market value of the boot received or the gain realized. This rule is intended to prevent taxpayers from using like-kind exchanges as a way to receive cash or other property without recognizing the full extent of their gains.

A Taxpayer That Receives Boot in a Like-Kind Exchange Resulting