Emily owns land for investment purposes that has a FMV of $300,000 (basis of $260,000). She exchanges the land, plus $40,000 cash, for a warehouse to be used in her business. The warehouse is worth $420,000, but is subject to a mortgage of $80,000 which Emily will assume. The gain realized by Emily on the exchange is
A) $40,000.
B) $80,000.
C) $120,000.
D) $160,000.
A) $40,000.
The taxpayer receives a warehouse worth $420,000, but in exchange gives up land with an adjusted basis of $260,000 and $40,000 of cash and assumes an $80,000 liability, resulting in the $40,000 realized gain.
You might also like to view...
Which item below is not a personality characteristic included in the Big Five model?
A. openness to experience B. meticulousness C. neuroticism D. extroversion
Lee and Carol Parton have sold their home for $750,000. They have lived in the home for 22 years. They are planning to retire and travel. They purchased the home for $200,000 and have made $50,000 in improvements. Their total gain realized on the sale is: A)?$550,000
B)?$500,000. C)?$750,000. D)?None of the above
In the context of diagnosing performance problems, which of the following statements is most likely true of the expectations component of the performance model?
A. Lack of financial resources and necessary equipment leads to performance problems. B. Problems are resolved by sending people who lack abilities for training. C. Problems occur when teams are unclear about their objectives. D. Abilities and skills are the components that make up expectations.
A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account, one effect will be:
A) An overstatement of equity. B) An understatement of equity. C) An understatement of assets. D) An understatement of liabilities. E) An overstatement of assets.