|Question||Refer to the facts in the preceding problem, but assume that ML exchanged the residential rental property for the 20 acres of investment land plus $22,000 (i.e., ML received cash in the exchange).
a. Assuming that ML’s exchange was negotiated at arm’s length, what is the FMV of the rental property?
b. If the adjusted basis of the rental property is $158,000, compute ML’s realized and recognized gain. What is the character of the recognized gain?
c. Compute ML’s basis in the 20 acres of investment land.