Answer:
$50,000
Explanation:
Note that the exchange here is a business property for another business property.
i.e. farmland for office building.
The total consideration (amount) received by tantrum is $350,000 (i.e. the FMV) and the mortgage of $120,000 .
This amounts to $120,000 + $350,000
= $470,000.
The property given up was worth $250,000.
And there's a mortgage of $70,000 given up along with the property.
This amounts to $250,000 + $70,000
= $320,000
The realized gain = $420,000 - $320,000
Gain = $150,000
But the recognised gain which will be lesser than the total realised gain is calculated by
$120,000 - $70,000
= $50,000
This is so because the $120,000 of mortgage given up by a party and assumed by the other party is treated as boot received, and the $70,000 of mortgage assumed is treated as boot given up.
The $50,000 of boot received is the recognized gain.