10. Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an...

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10. Fred and Sarajane exchanged equipment in a qualifying like-kind exchange. Fred gives up equipment with an adjusted basis of $14,000 (fair market value of $15,000) in exchange for Sarajane’s equipment with a fair market value of $12,000 plus $3,000 cash. How much gain should Fred recognize on the exchange?

a. $3,000

b. $2,000

c. $1,000

d. $0

e. None of the above LO 8.6

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