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:

Service Firms

Businesses that provide intangible products or services to consumers or other businesses.

Manufacturing Firms

Companies that use labor, equipment, and raw materials to produce finished goods on a large scale.

Work in Process Inventory

Goods partially completed during the manufacturing process, not yet ready for sale.

Materials Ledger Cards

Records used to track the quantities and costs of materials on hand in inventory through receipts, issuances, and balances.