Henri likes to invest in land. In a nontaxable exchange, Henri exchanges land having an adjusted basis of $8,500 and a FMV of $10,000, for a another parcel of land having a FMV of $15,000. In addition, Henri paid cash of $5,000. What is Henri's basis in the new land?
A) $5,000
B) $8,500
C) $13,500
D) $15,000
C) $13,500
Basis of property received = basis of property exchanged - boot received + gain recognized - loss recognized. The taxpayer exchanges land with an adjusted basis of $8,500 and cash of $5,000. No boot is received so no gain is recognized. The basis in the new land is $13,500.
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