Mary exchanged 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 in the transaction. What is Mary's adjusted basis in the land after the exchange?

Question

Mary exchanged 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  in the transaction. What is Mary's adjusted basis in the land after the exchange?

Quizplus · Accepted Answer

The exchange qualifies as a like-kind exchange. Since boot was given in the transaction, the fair market value of the boot given ($4,000) is added to the adjusted basis ($20,000) of the property given up.

Mary Exchanged an Office Building Used in Her Business for Some