Arlington LLC exchanged land used in its business for some new land. Arlington originally purchased the land it exchanged for $28,500. The new land had a fair market value of $35,250. Arlington also received $2,500 of office equipment in the transaction. What is Arlington'srecognized gain or loss on the exchange?

Question

Quizplus · Accepted Answer

Arlington's recognized gain is the lesser of the realized gain or the boot received. The realized gain is $6,750 ($35,250 + $2,500 - $28,500), and the boot received is $2,500. Therefore, the recognized gain is $2,500.

Arlington LLC Exchanged Land Used in Its Business for Some