Question

Jake Corp. exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by...

Jake Corp. exchanged land valued at $250,000 (adjusted basis = $175,000) for a building owned by Tiger Corporation valued at $350,000 (adjusted basis = $200,000) and $50,000 cash. In addition, Jake Corp. assumed the $150,000 mortgage on Tiger’s building. What are Jake’s and Tiger’s recognized gain or loss, respectively?

A 0, 0

B. $50,000, $100,000

C. $50,000, $150,000

D. $75,000, $150,000

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Homework Answers

Answer #1

Answer :-

The correct answer is Option C - $ 50,000 ,$ 150,000

Explanation :-

Jake's corporation recognized gain or loss is $ 50,000 which Jake Corp. received in exchange of land.

Whereas , Tiger's corporation Recognized gain or loss $ 150,000 mortgage of building as assumed by Jake Corp.

After exchange of asset Jake Corp has $50,000 cash and

Tiger Corporation has $150,000 mortgage on building.

Therefore, Jake’s and Tiger’s recognized gain or loss are $50,000 and $150,000.

If you have any queries please comment.

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