Will exchanges a building with a basis of $35,000, and subject to a liability of $30,000, for land with a FMV of $50,000 owned by Jane. Jane takes the land subject to the liability. The amount realized by Will is

A) $30,000.
B) $35,000.
C) $50,000.
D) $80,000.

Option D. $80,000

Explanation:

The Fair Market Value that Jane has paid of land is $50,000. The liability of $30,000 is attached with this land which Jane has taken as a payment to Will. So the total payment that Will has received = $50,000 + $30,000 = $80,000.

So this $80,000 is the fair market value of land that will be realized.

$80,000

Explanation:

We are given the following values

Exchange building basis = $35,000

Subject to liability = $30,000

Land FMV = $50,000

To get the Fair Market Value that Jane realizes we would need to add the liability of $30,000 is attached with this land which Jane has taken as a payment , which we are going to have as

= $50,000 + $30,000 = $80,000.

The fair market value of land that will be realized by Jane will be $80,000

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