40. Linda Loren transfers an apartment building with an adjusted basis of $150,000 and a fair market value of $240,000 for Carol Combs apartment building (adjusted basis $140,000) with a fair market value of $200,000. Lindas mortgage of $60,000 is assumed by Carol whose mortgage of $20,000 is assumed by Linda.

a.What is the realized and recognized gain or loss for Linda and Carol?

b. what are their bases in their acquired buildings?

(the question is based on CCH Federal Taxation Basic principles 2021)