When a taxpayer is released from a liability in a like-kind exchange,the amount of the release:
A)Never triggers gain recognition.
B)Always triggers a gain to be recognized.
C)Is treated as boot and may trigger gain recognition.
D)Does not affect the like-kind exchange in any way.

Question

Quizplus · Accepted Answer

When a taxpayer is released from a liability in a like-kind exchange, it is treated as boot and may trigger gain recognition. This is because the taxpayer is receiving something of value (the release from liability) that is not of like-kind to the property being exchanged.

When a Taxpayer Is Released from a Liability in a Like-Kind