Apply Like-Kind Exchange Rules Practice Test

A taxpayer exchanges an investment office building for an investment warehouse under IRC Section 1031 and receives $25,000 cash boot. The taxpayer asks how the basis of the replacement property is determined. What is the appropriate tax treatment for the exchange of these properties?

A taxpayer exchanges an investment office building for an investment warehouse in an IRC Section 1031 exchange. As part of the transaction, the other party assumes the taxpayer's mortgage on the relinquished property, and the taxpayer does not assume any debt on the replacement property; no cash changes hands. What are the consequences of receiving boot in this exchange?