How much is sams substituted basis in the nantucket land

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Joe Jackson, a real estate developer, would like to exchange his plot of land in Nantucket for a small apartment complex located in central Massachusetts. The apartment building is currently owned by Sam Tower. The fair market value of the building is $1.8 million and Sam's basis is currently $1.3 million. The property also has a mortgage balance of $600,000. Joe's land has a FMV of $1.2 million and is debt free. Joe's basis in the land is $900,000. Joe and Sam have agreed to swap properties. Joe will assume Sam's $600,000 mortgage on the apartment complex.

Question 1: How much is Sam's substituted basis in the Nantucket land?

Option A. $0

Option b. $1,200,000

Option C. $1,300,000

Option D. $1,800,000

Reference no: EM132504519

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