Perry Inc and Dally Company Entered into an Exchange of Real

question 48

Multiple Choice

Perry Inc. and Dally Company entered into an exchange of real property. Here is the information for the properties to be exchanged. $$\begin{array} { l r r } & \text { Perry } & \text { Dally } \\\text { FMV } & \mathbf { \$ 5 0 0 , 0 0 0 } & \mathbf { \$ 5 3 0 , 0 0 0 } \\\text { Adjusted tax basis } & \mathbf { 4 1 0 , 0 0 0 } & \mathbf { 2 8 3 , 0 0 0 } \\\text { Mortgage } & \mathbf { 7 0 , 0 0 0 } & \mathbf { 1 0 0 , 0 0 0 }\end{array}$$ Pursuant to the exchange, Perry assumed the mortgage on the Dally property, and Dally assumed the mortgage on the Perry property. Compute Dally's gain recognized on the exchange and its tax basis in the property received from Perry.

• A) $30,000 gain recognized; $313,000 basis in the Perry property
• B) 100,000 gain recognized; $383,000 basis in the Perry property
• C) $30,000 gain recognized; $283,000 basis in the Perry property
• D) None of the above

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Definitions:

Appalachian

Pertaining to the cultural region in the Eastern United States that stretches from the Southern Tier of New York to northern Alabama, Mississippi, and Georgia.

Psychological Debriefing

A form of crisis intervention in which victims are helped to talk about their feelings and reactions to traumatic incidents. Also called critical incident stress debriefing.

Posttraumatic Stress

A mental health condition triggered by experiencing or witnessing a terrifying event, causing intense fear, helplessness, or horror.

Severity

The intensity or degree of seriousness of a condition or situation.