Five Years Ago, Q&J Inc

Five years ago, Q&J Inc. transferred land with a $345,000 book and tax basis for a different parcel of land worth $472,000. Q&J included its $127,000 realized gain in book income, but the exchange was nontaxable. This year, Q&J sold the parcel of land received in the exchange for $533,000 cash. Compute Q&J's book and tax gain on sale.

A) $188,000 book and tax gain
B) $188,000 book gain and $61,000 tax gain
C) $61,000 book and tax gain
D) None of these choices are correct

Correct Answer:

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