Pamela Owns Land for Investment Purposes

Question 45
Multiple Choice

Pamela owns land for investment purposes. The land is worth $300,000 (basis of $260,000 to Pamela). Pamela exchanges the land,plus $20,000 cash,for a warehouse to be used in her business. The FMV of the warehouse is $400,000,but the warehouse is subject to a mortgage of $80,000,which is assumed by Pamela. Pamela must recognize a gain of A)$ 0. B)$ 40,000. C)$ 120,000. D)$ 140,000.