On October 1, Paula Exchanged an Apartment Building (Adjusted Basis

question 30

Multiple Choice

On October 1, Paula exchanged an apartment building (adjusted basis of $375,000 and subject to a mortgage of $125,000) for another apartment building owned by Nick (fair market value of $550,000 and subject to a mortgage of $125,000) . The property transfers were made subject to the mortgages. What amount of gain should Paula recognize?

• A) $0
• B) $25,000
• C) $125,000
• D) $175,000
• E) None of the above

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Definitions:

Curare

A toxic plant extract used traditionally as an arrow poison and medically to relax muscles during surgery.

Antagonist

A substance that blocks or dampens the action of a neurotransmitter or hormone, or a character in a story who opposes the protagonist, creating conflict.

Agonist

An agonist is a chemical or drug that binds to receptors in the body and activates them to produce a biological response.

Synapses

The junctions at which neurons communicate with other neurons, muscles, or glands through electrical or chemical signals.