V&P Company exchanged unencumbered investment land for farmland subject to a $200,000 mortgage. If V&P realized a $168,000 gain on the exchange, it must recognize the entire gain.

Question

Quizplus · Accepted Answer

In a like-kind exchange, if the property received is subject to a mortgage, the gain recognized is limited to the lesser of the realized gain or the net boot received, which includes the mortgage relief.

V&P Company Exchanged Unencumbered Investment Land for Farmland Subject to a $200,000