Drew traded his office copier in for a new one. The old copier had an adjusted basis of $400. The new copier cost $1,350, and he was given a trade-in allowance of $500.
I.The amount realized is $400.
II.Drew has a realized gain of $100.

Question

Drew traded his office copier in for a new one. The old copier had an adjusted basis of $400. The new copier cost $1,350, and he was given a trade-in allowance of $500.
I.The amount realized is $400.
II.Drew has a realized gain of $100.
​

Quizplus · Accepted Answer

Statement I is incorrect because the amount realized is not $400, it is the trade-in allowance given for the old copier, which is $500. 
Statement II is correct because the adjusted basis of the old copier is $400, and it was traded in for a new copier that cost $1,350 - this results in a realized gain of $100. (Realized gain = amount realized - adjusted basis = $500 - $400 = $100).

Drew Traded His Office Copier in for a New One