Bud exchanges a business use machine with an adjusted basis of $22,000 and a fair market value of $30,000 for another business use machine with a fair market value of $28,000 and $2,000 cash.What is Bud's recognized gain or loss?
A)$0
B)$2,000
C)$6,000
D)$8,000
E)None of these

Question

Quizplus · Accepted Answer

Amount realized ($28,000 + $2,000)$30,000
Adjusted basis (22,000)
Realized gain $ 8,000
Recognized gain $ 2,000
On the receipt of boot,the recognized gain is the lesser of the boot received or the realized gain.

Bud Exchanges a Business Use Machine with an Adjusted Basis