Discussion Question 13-5 (LO. 1) Marge owns land and a building (held for investment) with an adjusted basis of $75,000 and a fair market value of $250,000. The property is subject to a mortgage of $400,000. Because Marge is in arrears on the mortgage payments, the creditor is willing to accept the property in return for canceling the amount of the mortgage. a. Indicate whether the following situations would result in the adjusted basis of the property being less than the amount of the mortgage. Select "Yes" if the basis would be less than the mortgage, otherwise select "No". The mortgage was granted based on the fair market value of the property rather than the taxpayer's adjusted Yes basis of the property. Yes NoV No V Depreciation deductions in the early life of the asset may have exceeded the amortization of the mortgage principal The property increased in value after the mortgage was granted. The mortgage was granted based on the adjusted basis of the property. Feedback Check My Work b. If the creditor's offer is accepted, what are the effects on the amount realized, the adjusted basis, and the realized gain or loss for Marge? The amount realized is The adjusted basis is $ The realized gain s325,000