[kukuna2008]

I have a different answer for a Ninja MCQ:

In the CY Tantrum exchanged farmland for a office building. The farmland has a basis of 240,000, FMV of 390,000, and was encumbered by a 110,000 mortgage. The office building had an FMV of 340,000 and was encumbered by a 60,000 mortgage. Each party assumed teh other’s mortgage. What is the amount of Tantrum’s recognized gain?

the answer is 50,000.

But I calculated as ( Ninja book page 16 format):

FMV of assets received: 340,000

Add: relief of liability (Boot): 110,000

Amount realized: 450,000

subtract: Adjusted basis (240,000)

subtract:Liability assumed ( 60,000)

Gain realized 150,000

the recognized gain should be lesser of Boot or gain realized, thus the gain is 110,00. Can anyone tell me what concept of mine is wrong?

Thank you!

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