Maryexchanged an office building used in her business for some land. Mary originally purchased the building for $45,000, and it had an adjusted basis of $20,000 at the time of the exchange. The land had a fair market value of $40,000. Mary also gave $4,000 to the seller in the transaction. What is Mary's adjusted basis in the land after the exchange?
A)$20,000.
B)$24,000.
C)$36,000.
D)$40,000.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Mary's adjusted basis in the building was $20,000, and since she exchanged it for the land, this becomes her basis in the land as well. Adding the $4,000 cash paid to the seller to acquire the land, Mary's total basis in the land is $24,000.

Maryexchanged an Office Building Used in Her Business for Some