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:

Pension Benefits

Retirement plan benefits, either in lump sum or recurring payments, provided to employees as part of their compensation package.

Employee Pension Plan

An employee pension plan is a retirement plan funded by an employer that provides a fixed payout to retirees, usually based on factors such as salary history and length of employment.

Vested

Having an absolute right to an asset, benefit, or privilege, which is not contingent upon fulfilling any condition or the occurrence of a specific event.