Question

In an exchange, Luciana gave up her business-use real property (FMV $50,000, adjusted basis $35,000) for a smaller piece of business-use real property (FMV $25,000) and $25,000 cash. What is the gain realized and recognized on the exchange? ______ realized gain; _____ recognized gain. $5,000; $0 $15,000; $0 $15,000; $15,000 $15,000; $25,000

Answer 1

Answer:

Option 4th is correct.i.e $15,000;$25,000.

The realized gain is $15000(25,000+25,000-35000) ,

Where as the recognized gain on an exchange is $25000.

$15000 realized gain; $25,000 recognized gain