Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two years after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000.
Without taking into consideration any changes to the adjusted basis of the property subsequent to the exchange with Bob (such as for depreciation), how much, if any, gain or loss did Bob recognize with respect to the exchange with Carl?
Selecton one of the answers below and show your work:
a. No gain or loss was recognized.
b. $11,000 gain was recognized.
c. $214,000 gain was recognized.
d. The transfer by Bob to Carl is a gift.
e. $21,000