@mama here ya go.
This answer is correct. The requirement is to determine the amount of Tatum's recognized gain on the exchange. Generally, no gain or loss is recognized on the exchange of business or investment property for property of a like kind. Since like-kind means the same class of property, an exchange of farmland for an office building qualifies as a like-kind exchange. However, in a like-kind exchange, a realized gain ($400,000 − $250,000 = $150,000 in this case) will be recognized to the extent of unlike property (i.e., boot) received. Here, Tatum's assumption of the $70,000 mortgage on the acquired office building is treated as boot paid, while the $120,000 mortgage on the farmland exchanged is treated as boot received. These mortgages are offset and result in Tatum receiving net boot and a recognized gain of $50,000.
REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16
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