Certified Exchange Specialist (CES)

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A taxpayer relinquishes a property with a $500,000 mortgage and acquires replacement property encumbered by only a $400,000 mortgage. The $100,000 difference is best described as:

Cash boot received by the taxpayer Mortgage boot (net debt relief) treated as boot A non-taxable reduction in exchange value An exchange expense that offsets realized gain

Correct Answer:

Mortgage boot (net debt relief) treated as boot

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