Moss exchanges a warehouse for a building he will use as an office building. The adjusted basis of the warehouse is $600,000 and the fair market value of the office building is $350,000. In addition, Moss receives cash of $150,000. What is the recognized gain or loss and the basis of the office building?
A) $0 and $350,000.
B) $0 and $450,000.
C) ($150,000) and $300,000.
D) ($200,000) and $350,000.
E) None of the above.

Question

Quizplus · Accepted Answer

The recognized gain is $0 because it is a like-kind exchange, and the basis of the office building is $450,000 (adjusted basis of the warehouse $600,000 - cash received $150,000).

Moss Exchanges a Warehouse for a Building He Will Use