Detailed Answer
(d) The requirement is to determine the reportable gain
resulting from the exchange of an apartment building for an office
building. No gain or loss is recognized on the exchange of business
or investment property for property of a like-kind. The term
“like-kind” means the same class of property (i.e., real estate must
be exchanged for real estate, personal property exchanged for
personal property). Thus, the exchange of an apartment building
for an office building qualifies as a like-kind exchange. Since no
boot (money or unlike property) was received, the realized gain
of $600,000 – $200,000 = $400,000 is not recognized.