In 20X6, Hat Corporation exchanged an apartment complex in Dallas (purchased in 20X2; cost $540,000; adjusted basis $350,000) for an apartment complex in Houston (FMV $710,000). In 20X9, after deducting $90,000 of depreciation, Hat sells the Houston apartment complex for $780,000. Which of the following statements is true regarding these transactions?

Answered: In 20X6, Hat Corporation exchanged an apartment complex in Dallas (purchased in 20X2; cost $540,000; adjusted basis $350,000) for an apartment complex in…

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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16. In 20X6, Hat Corporation exchanged an apartment complex in Dallas (purchased in 20X2; cost $540,000%3;
adjusted basis $350,000) for an apartment complex in Houston (FMV $710,000). In 20X9, after deducting
$90,000 of depreciation, Hat sells the Houston apartment complex for $780,000. Which of the following
statements is true regarding these transactions?
a. Hat's 25% gain is $280,000.
b. Hat has ordinary income of $56,000 on the sale.
c. Hat's 25% gain is $90,000.
d. Hat has ordinary income of $18,000 on the sale.
e. None of the answers provided is correct.

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