Hank Exchanged an Old Asset with a $12,000 Adjusted Basis

question 100

Multiple Choice

Hank exchanged an old asset with a $12,000 adjusted basis for a new asset with a $32,000 FMV plus $2,000 cash. Compute Hank's realized and recognized gain if the new and old assets are like-kind properties.

• A) $20,000 realized gain; $0 recognized gain
• B) $22,000 realized gain; $0 recognized gain
• C) $22,000 realized gain; $2,000 recognized gain
• D) $2,000 realized gain; $2,000 recognized gain

---

Definitions:

Gestalt

A psychological theory suggesting that an organized whole is perceived as more than the sum of its parts, emphasizing pattern and context in perception.

Training

The process of enhancing one's skills, knowledge, and competencies through practice and instruction, aimed at improving performance in a specific area.

Interpersonal

Relating to or involving relations between people, typically emphasizing direct face-to-face interactions.

Downward Social Comparison

The process of comparing oneself to others who are perceived as worse off or inferior in order to feel better about one's own situation.