Question

Dena owns 500 acres of farm land in southeastern Maryland. Her adjusted basis for the land is $480,000 and there is a $400,000 mortgage on the land. She exchanges the land for an office building owned by Chris in Newark, NJ. The building has a fair market value of $900,000. Chris assumes Dena's mortgage on the land. What is the amount of Dena's recognized gain or loss on the exchange?

Answer 1

Answer:

Consider the following analysis.

Explanation:

Dena owns 500 acres of farm land in southeastern Maryland.

Adjusted basis for the land is $4,80,000 and $4,00,000 mortgage on the land.

Bulding Fair market value is $9,00,000

Dena realized gain or los is $0 beacuse there is no cash recd against exchange.

So, Dena realized gai/loss is $0

So, Dena recognized gain is $4,00,000