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:

Warsaw

The capital and largest city of Poland, known for its historical significance, cultural heritage, and as a symbol of Polish national identity.

Détente

A period of improved relations between the United States and the Soviet Union during the Cold War, beginning in the late 1960s.

Nuclear Arms Reduction

Efforts and agreements aimed at reducing the number and capacity of nuclear weapons globally to prevent nuclear proliferation and decrease the likelihood of nuclear warfare.

United States

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