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:

Data

Information that is collected, stored, analyzed, and interpreted to support decision-making processes.

Trend Percentages

Analysis method used in financial and operational analysis to observe the direction and pace of changes in related data points over time.

Year 1

The first year in a given time series, often used as a reference point for financial analysis or reporting.

Year 2

The second year in a sequence of years, often used in financial documentation to denote the second operational or fiscal year.