Question

Where non-like-kind property other than cash is received as boot, what is the amount of the boot?

1) The amount of the boot is the property's fair market value.
2) The amount of the boot is the property's cost basis.
3) The amount of the boot is the property's adjusted basis.
4) The amount of the boot is the property's book value.

Answer 1

The amount of the boot is the property's fair market value.

Step-by-step explanation:

In a like-kind exchange, if non-like-kind property is received as boot, the amount of the boot is the property's fair market value. For example, let's say you exchange a piece of land worth $200,000 for a building worth $180,000 and receive $20,000 in cash as boot. In this case, the amount of the boot is $20,000, which is the fair market value of the building received.