Nixon Inc Transferred Asset a to an Unrelated Party in Exchange

question 72

Multiple Choice

Nixon Inc. transferred Asset A to an unrelated party in exchange for Asset Z and $15,750 cash. Nixon's tax basis in Asset A was $400,000, and Asset Z had a $510,000 appraised FMV. Which of the following statements is true?

• A) If Asset A and Asset Z are like-kind property, Nixon recognizes a $15,750 gain and takes a $400,000 basis in Asset Z.
• B) If Asset A and Asset Z are not like-kind property, Nixon recognizes a $110,000 gain and takes a $510,000 basis in Asset Z.
• C) If Asset A and Asset Z are like-kind property, Nixon recognizes no gain and takes a $400,000 basis in Asset Z.
• D) If Asset A and Asset Z are like-kind property, Nixon recognizes a $15,750 gain and takes a $415,750 basis in Asset Z.

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Definitions:

Stock Portfolio

A collection of stocks owned by an individual or an institution, diversified across various sectors.

Developed Countries

Nations with high levels of industrialization, a high standard of living, and developed infrastructure.

Industrialization

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods, involving increased mechanization.