A Owns a Ranch in Wyoming,which B Offers to Purchase

question 74

Multiple Choice

A owns a ranch in Wyoming,which B offers to purchase.A is not willing to sell the ranch but is willing to exchange the ranch for an apartment complex in Louisiana.The complex is available for sale.B purchases the apartment complex in Louisiana from C and transfers it to A in exchange for A's ranch.The ranch and the complex each have a $1,000,000 fair market value.Which of the following is true?

• A)The transaction qualifies as a like-kind exchange for B but not for A.
• B)The transaction qualifies as a like-kind exchange for both B and A.
• C)The transaction qualifies as a like-kind exchange for A but not for B.
• D)The transaction does not qualify as a like-kind exchange for either B or A.

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Definitions:

Original Investment

The initial amount of money put into a project, asset, or business, used as a basis for determining future returns or profitability.

Salvage Value

An alternative term for residual value, referring to the estimated resale value of an asset at the end of its useful life.

Computed Net

The calculated net value or result after considering all relevant deductions, adjustments, or allowances.

Annuity

An annuity is a financial instrument that provides a consistent series of payments to a person, often serving as a source of income for people in retirement.