Babex Inc and OMG Company Entered into an Exchange of Real

question 71

Multiple Choice

Babex Inc. and OMG Company entered into an exchange of real property. Here is the information for the properties to be exchanged. Pursuant to the exchange, OMG assumed the mortgage on the Babex property. Compute Babex's gain recognized on the exchange and its tax basis in the property received from OMG.

• A) $175,000 gain recognized; $768,000 basis in OMG property
• B) No gain recognized; $768,000 basis in OMG property
• C) $175,000 gain recognized; $943,000 basis in OMG property
• D) None of the above

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Definitions:

Assistance

The act of providing help or support, especially to people in need.

Dive Shop

A retail establishment that sells scuba diving and snorkeling equipment, and often offers dive training and dive trip arrangements.

Damages

Monetary compensation awarded by a court to indemnify harm or loss suffered.

Diving Equipment

Tools and gear used for underwater diving adventures, including items like masks, fins, and oxygen tanks.