Pamela Owns Land for Investment Purposes

Multiple Choice

Pamela owns land for investment purposes.The land is worth $300,000 (basis of $260,000 to Pamela) .Pamela exchanges the land,plus $20,000 cash,for a warehouse to be used in her business.The FMV of the warehouse is $400,000,but the warehouse is subject to a mortgage of $80,000,which is assumed by Pamela.Pamela must recognize a gain of

A) $0.
B) $40,000.
C) $120,000.
D) $140,000.