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:

UCC

The Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, intended to standardize regulations across the states.

Consideration

A concept in contract law that involves something of value exchanged between parties as part of an agreement.

Subrogation

The legal right held by insurers to pursue a third party that caused an insurance loss to the insured.

Secured

Relating to a loan or obligation that is backed by collateral, ensuring the lender has recourse in case of default by the borrower.