Babex IncAnd OMG Company Entered into an Exchange of Real Property

question 41

Multiple Choice

Babex Inc.and OMG Company entered into an exchange of real property.Here is the information for the properties to be exchanged. Pursuant to the exchange,OMG assumed the mortgage on the Babex property.Compute OMG's gain recognized on the exchange and its tax basis in the property received from Babex.

• A)$175,000 gain recognized; $514,500 basis in Babex property.
• B)No gain recognized; $689,500 basis in Babex property.
• C)No gain recognized; $514,500 basis in Babex property.
• D)None of the choices are correct.

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Definitions:

Organic Matter

Material derived from living organisms, including plants, animals, and their byproducts, containing carbon compounds.

Proteins

are large, complex molecules made up of amino acids that play many critical roles in the body, including catalyzing metabolic reactions, DNA replication, responding to stimuli, and transporting molecules from one location to another.

Cytoplasm

The gel-like substance within a cell, excluding the nucleus, containing organelles and is involved in numerous cellular processes.

Plane

A flat, two-dimensional surface that extends infinitely in all directions.