Sarah Exchanges Investment Real Estate with Russell

Multiple Choice

Sarah exchanges investment real estate with Russell. Sarah's adjusted basis in her two-year old property is $280,000. The property is encumbered by a mortgage of $100,000 and has a fair market value of $320,000 when exchanged. Russell assumes that debt. Russell paid $80,000 cash for his property in 1999 and it is appraised at $150,000 on the day of the exchange. Russell pays Sarah enough in cash to balance the exchange. What is Russell's basis in the new land?

A) $80,000
B) $180,000
C) $250,000
D) $320,000
E) None of the above