Question

5. Jenny owns an office building in Boston with an adjusted basis of $100,000 and a fair market value of $500,000. It is encumbered by mortgage debt of $80,000. Jenny meets Henry, who owns an apartment building in Houston, tax basis of $190,000 and fair market value of $420,000. They decide to exchange the two properties. Jenny takes the apartment building and Henry takes the office building along with assuming its debt. What is Jenny's recognized gain from the exchange and her basis in the apartment building? a $400,000; $420,000 b. $80,000; $100,000 c. $230,000; $500,000 d. $0; $270,000 6. Sandra, who is single, moved into a new home three months ago that she had purchased for $200,000. Because Sandra's employer is closing their office and moving to a different state, she now sells her home for $240,000. What is Sandra's recognized gain from the sale of her home? a. $0 c. $31,250 b. $8,750 d. $40,000 7. Mark's business building was destroyed by a hurricane in 20X5. The building had an adjusted basis of $250,000 and a fair market value of $270,000 immediately before the hurricane damage. Mark received a reimbursement of $300,000 from his insurance company in 20X6 and immediately spent $270,000 on a new business building. What amount must Mark include in his gross income in 20X6? a. $0 c. $30,000 b. $20,000 d. $50,000

Answer 1

5) Jenny's recognised gain from exchange is &0 and her basis in the apartment building will be &270000

6)Sandra's recognised gain form the sale of her home is $40000.

7)Mark must include $50000 in his gross income in 2006.