Bud Exchanges a Business Use Machine with an Adjusted Basis

question 108

Multiple Choice

Bud exchanges a business use machine with an adjusted basis of $22,000 and a fair market value of $30,000 for another business use machine with a fair market value of $28,000 and $2,000 cash. What is Bud's recognized gain or loss?

• A)$0
• B)$2,000
• C)$6,000
• D)$8,000
• E)None of the above

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Definitions:

Buyer

An individual or entity that purchases goods or services from another in a commercial transaction.

Allocation Of Risk

The process of defining and assigning the financial or operational responsibilities associated with potential risks in contractual agreements.

Parties

Individuals, groups, or entities that enter into a legal agreement or are involved in a legal proceeding.

Agreement

A mutual understanding or arrangement between two or more parties about their relative rights and responsibilities.