Jack Exchanged Land with an Adjusted Basis of $65,000 Subject

question 75

Multiple Choice

Jack exchanged land with an adjusted basis of $65,000 subject to a liability of $22,000 for $50,000 (FMV) of stock owned by Hayden.Hayden takes the land subject to the liability.Jack incurs $500 of selling expenses.What is the amount of Jack's realized gain on the exchange?

• A)($14,000)loss
• B)($14,500)loss
• C)$6,500 gain
• D)$7,000 gain

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Definitions:

Demand Deposits

Bank accounts from which deposited funds can be withdrawn at any time without any notice to the institution.

Federal Reserve District Bank

One of the 12 regional banks in the Federal Reserve System of the United States, each responsible for implementing the country's monetary policy within its specific district.

Reserve

A portion of funds or resources set aside for specific future use, often related to monetary or commodity resources within financial institutions or government reserves.

Excessive Reserves

Funds held by banks over and above the legal reserve requirement, not required but possibly maintained for additional safety or for other purposes.