Lily Exchanges a Building She Uses in Her Rental Business

question 263

Multiple Choice

Lily exchanges a building she uses in her rental business for a building owned by Kendall, which she will use in her rental business. The adjusted basis of Lily's building is $120,000 and the fair market value is $170,000. Which of the following statements is correct?

• A) Lily's recognized gain is $50,000 and her basis for the building received is $120,000.
• B) Lily's recognized gain is $50,000 and her basis for the building received is $170,000.
• C) Lily's recognized gain is $0 and her basis for the building received is $120,000.
• D) Lily's recognized gain is $0 and her basis for the building received is $170,000.
• E) None of the above is correct.

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