Grant exchanges an old pizza oven from his business for a new oven.In addition to the old oven,which has a basis of $10,000,Grant pays $4,000 cash and takes out a loan on the new oven for $6,000.The new oven is valued at $22,000.What is Grant's recognized gain or loss due on this transaction?
A)$- 0 -
B)$2,000
C)$12,000
D)$16,000
E)$22,000

Question

Quizplus · Accepted Answer

In a like-kind exchange, no gain or loss is recognized if the exchange is solely for like-kind property. Here, Grant exchanged an old oven for a new one, which qualifies as a like-kind exchange. The cash and loan do not affect the recognition of gain or loss in this context.

Grant Exchanges an Old Pizza Oven from His Business for a New