Gena exchanges land held as an investment with a $60,000 basis for other land with a $80,000 FMV and a motorcycle with a $10,000 FMV. The acquired land is to be held for investment and the motorcycle is for personal use. What is the amount of recognized gain?
A) $0
B) $10,000
C) $20,000
D) $30,000
B) $10,000
This transaction qualifies as a like-kind exchange with boot received. The realized gain is $30,000 [($80,000 + $10,000) amount realized - $60,000 adjusted basis]. Gain is recognized to the extent of the lesser of gain realized or boot received—the motorcycle ($10,000) is non-like-kind property and is considered boot.
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