12. Ethyl owns an apartment house that has an adjusted basis of $950,000 but is subject to a mortgage of $240,000. She transfers the apartment house to Bert and receives from him $150,000 in cash and an office building with a fair market value of $975,000 at the time of the exchange. Bert assumes the $240,000 mortgage on the apartment house.
a. What is Ethyl's realized gain or loss?
b. What is her recognized gain or loss?
c. What is the basis of the newly acquired office building?
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FMV of property Received 975,000
Realized gain or losses are discussed.