On October 1, Paula Exchanged an Apartment Building (Adjusted Basis

question 30

Multiple Choice

On October 1, Paula exchanged an apartment building (adjusted basis of $375,000 and subject to a mortgage of $125,000) for another apartment building owned by Nick (fair market value of $550,000 and subject to a mortgage of $125,000) . The property transfers were made subject to the mortgages. What amount of gain should Paula recognize?

• A) $0
• B) $25,000
• C) $125,000
• D) $175,000
• E) None of the above

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Definitions:

Colour Constancies

The ability to perceive colors of objects, under varying lighting conditions, as being relatively constant even when the type of light changes.

Accommodate

To adjust actions or support needs, often making space or provisions for something.

Light Purity

A measure of the extent to which a light source emits a single wavelength, affecting the saturation of the perceived color.

Brightness

A perception of how luminous an object appears, depending on the amount of light it reflects or emits.