On October 1, Paula exchanged an apartment building (adjusted basis of $375,000 and subject to a mortgage of $125,000) for another apartment building owned by Nick (fair market value of $550,000 and subject to a mortgage of $125,000). The property transfers were made subject to the mortgages. What amount of gain should Paula recognize?
A) $0
B) $25,000
C) $125,000
D) $175,000
E) None of the above

Question

Quizplus · Accepted Answer

Paula exchanged properties of like-kind and the mortgages were equal, so no gain is recognized under the like-kind exchange rules.

On October 1, Paula Exchanged an Apartment Building (Adjusted Basis