Jack Exchanged Land with an Adjusted Basis of $65,000 Subject

question 75

Multiple Choice

Jack exchanged land with an adjusted basis of $65,000 subject to a liability of $22,000 for $50,000 (FMV) of stock owned by Hayden.Hayden takes the land subject to the liability.Jack incurs $500 of selling expenses.What is the amount of Jack's realized gain on the exchange?

• A)($14,000)loss
• B)($14,500)loss
• C)$6,500 gain
• D)$7,000 gain

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Definitions:

LLCs

Limited Liability Companies, a business structure in the United States that offers personal liability protection and flexibility in management and taxation to its members.

S-Type Corporations

S Corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

Personal Tax Rates

The percentage at which an individual is taxed on their income, which varies according to income levels and jurisdictions.

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in another's best interests, such as between shareholders and management.