1. You have Parking Lot 1 used in a trade or business and you trade it for Parking Lot 2 to be used in a trade or business. Here are the facts:

   Asset sold - Parking Lot 1

   $400,000 Historical Cost

   Purchased on 1/1/2015

   $125,000 Deprciation taken on improvements to date

   $20,000 severance paid by city for a utility easement in 2017

   $10,000 selling expenses paid on sale

   Asset received from purchasing party - Parking Lot 2

   $150,000 adjusted basis

   $300,000 Fair market value

   Plus $50,000 Assumption of Mortgage on Parking Lot 1

   What is the recognized gain and basis of Parking Lot 2?

   No gain recognized $255,000 basis of Parking Lot 2 $15,000 gain recognized $300,000 basis of Parking Lot 2 $50,000 gain recognized $325,000 basis of Parking Lot 2 $50,000 gain recognized $305,000 basis of Parking Lot 2