Kole owns a warehouse used in his business which has an adjusted basis of $240,000 and is subject to a mortgage with an $80,000 principal balance.Kole exchanges the warehouse for land worth $320,000.In addition,he receives cash of $40,000.What is Kole's realized gain?

Question

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C)The total value received in the exchange is $440,000 (the sum of the $320,000 FMV of the land plus the debt relief of $80,000 and the cash of $40,000).The realized gain is $200,000 ($440,000 - $240,000 adjusted basis).

Kole Owns a Warehouse Used in His Business Which Has