ST, Inc and Firm WX are negotiating an exchange of the following business properties:

Office Building Owned by ST: FMV $2,000,000 & Mortgage Payable ($450,000)

Warehouse owned by WX: FMV $1,700,000

ST agrees to pay $150,000 cash to WX to equalize the value of the exchange. STs adjusted basis in the office building is $700,000, and WXs adjusted basis in the warehouse is $500,000.

What is the issue here?

9-23 \#1 Issue Recognition ST, Inc and Firm WX are negotiating an exchange of the following business properties: \begin{tabular}{|c|c|c|} \hline & Office Building (owned by ST) & Warehouse (owned by WX) \\ \hline FMV & $2,000,000 & $1,700,000 \\ \hline Mortgage & ($450,000) & $0 \\ \hline CashPaid(Boot) & $150,000 & $0 \\ \hline Total & $1,700,000 & $1,700,000 \\ \hline \end{tabular} ST agrees to pay_ $150,000 cash to WX to equalize the value of the exchange. ST's adjusted basis in the office building is $700,000, and WX's adjusted basis in the warehouse is $500,000