Answered

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Steve Stromm transfers an office building with an adjusted basis of $200,000 and a fair market value of $300,000 for Andrew Astor's office building (adjusted basis $190,000) with a fair market value of $250,000. Steve's mortgage of $120,000 is assumed by Andrew whose mortgage of $70,000 is assumed by Steve. What is Andrew's Recognized Gain?

Sagot :

Cricetusidn

Answer:

The correct answer is "10,000".

Explanation:

The given values are:

Fair market value,

= $300,000

Andrew's adjusted basis,

= $190,000

Its fair market value,

= $250,000

Steve's mortgage,

= $120,000

Andrew's mortgage,

= $70,000

According to the question,

Steve is losing out,

= [tex]300000 - 200000 + 70000[/tex]

= [tex]170,000[/tex]

Andrew is losing out,

= [tex]250000 - 190000 + 120000[/tex]

= [tex]180,000[/tex]

Now,

Steve gains the amount,

= [tex]Andrew \ losing-Steve \ losing[/tex]

= [tex]180,000 - 170,000[/tex]

= [tex]10,000[/tex]

So that Andrew loses the same amount as Steve i.e.,

= 10,000

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