Babex Inc and OMG Company Entered into an Exchange of Real

question 53

Multiple Choice

Babex Inc. and OMG Company entered into an exchange of real property. Here is the information for the properties to be exchanged. $\begin{array}{lll}&\text { Babex }&OMG\\\text {FMV }&\$1,000,000&\$825,000\\\text { Adjusted tax basis}&768,000&514,500\\\text {Mortgage }&175,000&-0-\\\end{array}$ 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 these choices are correct.

---

Definitions:

Work Improvements

encompasses efforts and initiatives aimed at enhancing job performance, productivity, and satisfaction within the workplace.

Cross-cultural Communication

The process of exchanging information and understanding between individuals from different cultures, enabling effective interaction and collaboration.

Effective Principles

Fundamental norms or rules of conduct that, when followed, contribute to achieving desired outcomes efficiently and successfully.

Suggestion System

A formal mechanism within an organization where employees can submit ideas or proposals for improvements in processes, products, or overall operations.