Perry Inc. and Dally Company entered into an exchange of real property. Here is the information for the properties to be exchanged. Pursuant to the exchange, Perry assumed the mortgage on the Dally property, and Dally assumed the mortgage on the Perry property. Compute Dally's gain recognized on the exchange and its tax basis in the property received from Perry.

Question

Perry Inc. and Dally Company entered into an exchange of real property. Here is the information for the properties to be exchanged.  Pursuant to the exchange, Perry assumed the mortgage on the Dally property, and Dally assumed the mortgage on the Perry property. Compute Dally's gain recognized on the exchange and its tax basis in the property received from Perry.

Quizplus · Accepted Answer

To compute the gain recognized by Dally, we need to calculate the fair market value of the property received from Perry and subtract the adjusted basis of the property transferred to Perry. We also need to take into account any cash or other property exchanged in the transaction.
Assuming there was no cash or other property exchanged, the calculations would be as follows:
Fair market value of property received from Perry = $313,000
Adjusted basis of property transferred to Perry = $283,000
Therefore, Dally's gain recognized on the exchange would be $30,000.
Dally's tax basis in the property received from Perry would be equal to the adjusted basis of the property transferred to Perry, which is $283,000. Therefore, the correct answer is C.

Perry Inc and Dally Company Entered into an Exchange of Real