Question
Lindsey exchanges investment real estate parcels with Donna. Lindsays adjusted basis in the property is $400,000, and it is encumbered by a mortgage liability of
Lindsey exchanges investment real estate parcels with Donna. Lindsays adjusted basis in the property is $400,000, and it is encumbered by a mortgage liability of $200,000. Donna assumes the mortgage. Donna's property is appraised at $1,000,000 and is subject to a $100,000 liability. Lindsey assumes the liability. If no cash is exchanged, what is Lindsey's basis in the new real estate?
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| a. | $- 0 - |
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| b. | $100,000 |
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| c. | $200,000 |
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| d. | $400,000 |
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| e. | $600,000 |
The answer is (d) $400,000. Please explain how to get this number. Thank you!
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Principles Of Financial And Managerial Accounting Volume 2
Authors: Thomas D Hubbard
3rd Edition
0873934911, 978-0873934916
