Molly Exchanges a Small Machine (Adjusted Basis of $85,000; Fair

question 14

Multiple Choice

Molly exchanges a small machine (adjusted basis of $85,000; fair market value of $78,000) used in her business and investment land (adjusted basis of $10,000; fair market value of $15,000) for a large machine (fair market value of $93,000) to be used in her business in a like-kind exchange. What is Molly's recognized gain or loss?

• A)$0
• B)$5,000
• C)($2,000)
• D)($7,000)
• E)None of the above

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Definitions:

Summary Judgment

A summary judgment is a legal determination made by a court without a full trial, granted when there is no dispute over the material facts of the case and one party is entitled to judgment as a matter of law.

Probable Cause

A reasonable ground for belief that someone may have committed a crime, warranting their arrest or the issuance of a search warrant.

Committed

Dedicated or bound to a certain course of action or policy.

Bench Trial

A trial by a judge without the involvement of a jury, where the judge makes decisions on both the law and the facts.