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Ken owns land (FMV $850,000; cost $500,000) subject to a $230,000 liability. Ken plans to...

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Accounting

Ken owns land (FMV $850,000; cost $500,000) subject to a $230,000 liability. Ken plans to exchange the land for land owned by Val (FMV $835,000; cost $650,000) which is subject to a $190,000 liability. Each will assume the others debt. One of the parties must add cash to equalize the exchange. What is Kens recognized gain on the exchange?

1. $ 15,000

2. None of the answers provided is correct.

3. $230,000

4. $ 40,000

5. $350,000

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