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3 April, 14:40

Mary exchanged an office building used in her business for some land. Mary originally purchased the building for $45,000, and it had an adjusted basis of $20,000 at the time of the exchange. The land had a fair market value of $40,000. Mary also gave $4,000 to the seller in the transaction. What is Mary's adjusted basis in the land after the exchange? Group of answer choices

a. $20,000b. $24,000c. $36,000d. $40,000e. none of these choices are correct

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  1. 3 April, 14:51
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    The answer is: B) $24,000

    Explanation:

    This type of exchange is classified as a like-kind exchange (1031 exchange); it is a transaction that allows a company to dispose an asset and acquire another replacement asset without generating a tax liability from the sale of the replaced asset.

    $40,000 (replacement asset) + $4,000 (cash paid) - $20,000 (replaced asset) = $24,000
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