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

question 34

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

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