Rosilyn Trades Her Old Business-Use Car with an Adjusted Basis

Multiple Choice

Rosilyn trades her old business-use car with an adjusted basis of $13,000 and an outstanding loan liability balance of $2,000 for a new business-use car valued at $9,000 plus $3,000 cash from Bob's Auto Sales and Loan Company. Bob assumes Rosilyn's loan balance. What is Rosilyn's recognized gain on the transaction?

A) $- 0 -
B) $1,000
C) $2,000
D) $3,000
E) $5,000