If Pam transfers an asset to Fred and the asset is subject to a liability that is
Question:
If Pam transfers an asset to Fred and the asset is subject to a liability that is assumed by Fred, how does Fred's assumption of the liability affect the amount realized by Pam? How does Fred's assumption of the liability affect his basis for the property?
A. The amount realized by Pam is not affected by the amount of the liability assumed by Fred. Fred's basis is not affected by the amount of the assumed liability.
B. The amount realized by Pam is decreased by the amount of the liability assumed by Fred. Fred's basis is decreased by the amount of the assumed liability.
C. The amount realized by Pam is increased by the amount of the liability assumed by Fred. Fred's basis is increased by the amount of the assumed liability.
D. The amount realized by Pam is decreased by the amount of the liability assumed by Fred. Fred's basis is increased by the amount of the assumed liability.
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson