Matthew Exchanges an Investment Apartment Building for a Parcel of Land

question 84

Short Answer

Matthew exchanges an investment apartment building for a parcel of land. The apartment building has a fair market value of $80,000 and an adjusted basis of $95,000. The land's value is $60,000. Matthew receives $20,000 cash in the exchange. What is Matthew's recognized gain or (loss) on the exchange and his basis in the land?
?
$\begin{array} { c c } \text { Gain (Loss) Recognized } & \text { Basis } \\\end{array}$
A) $\begin{array} { c c } &\$ - 0 - &&&&&& \$ 75,000 \\\end{array}$
B) $\begin{array} { c c } &\$ ( 15,000 ) &&&&&& \$ 65,000 \\\end{array}$
C) $\begin{array} { c c } &\$ ( 35,000 ) &&&&&& \$ 85,000 \\\end{array}$
D) $\begin{array} { c c } &\$ 20,000 &&&&&& \$ 30,000 \\\end{array}$
E) $\begin{array} { c c } & \$ 15,000 &&&&&& \$ 35,000\end{array}$

• A) \(\begin{array} { c c } &\$ - 0 - &&&&&& \$ 75,000 \\\end{array}\)
• B) \(\begin{array} { c c } &\$ ( 15,000 ) &&&&&& \$ 65,000 \\\end{array}\)
• C) \(\begin{array} { c c } &\$ ( 35,000 ) &&&&&& \$ 85,000 \\\end{array}\)
• D) \(\begin{array} { c c } &\$ 20,000 &&&&&& \$ 30,000 \\\end{array}\)
• E)\(\begin{array} { c c } & \$ 15,000 &&&&&& \$ 35,000
• \end{array}\)

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Definitions:

Dollar General

An American chain of variety stores headquartered in Tennessee, known for selling low-priced products.

Merchandise

Products available for sale, particularly in the context of retail.

Target Market

The specific group of consumers at which a product or service is aimed, characterized by similar needs, interests, or demographic profiles.

Large Manufacturers

Businesses that operate on a large scale in the production of goods, often utilizing extensive facilities and machinery.