Daniella exchanges business equipment with a $100,000 adjusted basis for $10,000 cash and business equipment with a $96,000 FMV.What is the amount of gain recognized on the exchange?
A)$0
B)$4,000
C)$6,000
D)$10,000

Question

Quizplus · Accepted Answer

C)This transaction qualifies as a like-kind exchange with boot received.Amount Realized ($10,000 + $96,000)- Adjusted Basis ($100,000)= $6,000 gain realized.Gain recognized to the lesser of realized gain ($6,000)or boot received ($10,000).

Daniella Exchanges Business Equipment with a $100,000 Adjusted Basis for $10,000