Mrs. Volter exchanged residential real estate for a commercial office building. The residential real estate was subject to a $92,800 mortgage, which was assumed by the other party to the exchange. Mrs. Volter must treat the relief of the mortgage as $92,800 boot received.

Question

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When a mortgage is assumed by the other party in a real estate exchange, it is considered as relief of debt to the party who gave up the property. This relief of debt is treated as boot received and must be reported as part of the exchange transaction. Therefore, Mrs. Volter must treat the $92,800 mortgage relief as boot received.

Mrs Volter Exchanged Residential Real Estate for a Commercial Office