Richard exchanges a building with a basis of $35,000, and subject to a liability of $25,000, for land with a FMV of $50,000 owned by Bill. Bill takes the building subject to the liability. What is the amount of Richard's realized gain?
A) $0
B) $15,000
C) $25,000
D) $40,000
D) $40,000
Amount realized $75,000 (FMV land $50,000 + $25,000 debt assumed by buyer) - $35,000 basis = $40,000 gain.
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