Sanjay Exchanges a Warehouse He Uses in His Rental Business

Multiple Choice

Sanjay exchanges a warehouse he uses in his rental business for a building owned by Sidney which he will use in his rental business.The adjusted basis of Sanjay's building is $320,000 and the fair market value is $500,000.The adjusted basis of Sidney's warehouse is $160,000 and the fair market value is $500,000.Which of the following statements is correct?

A) Sanjay's recognized gain is $0 and his basis for the warehouse received is $500,000.
B) Sanjay's recognized gain is $180,000 and his basis for the warehouse received is $320,000.
C) Sanjay's recognized gain is $0 and his basis for the warehouse received is $320,000.
D) Sanjay's recognized gain is $180,000 and his basis for the warehouse received is $500,000.