Marge owns land and a building (held for investment) with adjusted basis of $75,000 and fair market value of $250,000.The property is subject to mortage of $ 400,000.Because Marge is in arrears on the mortage payments, the creditor is willing to accept the property in return for canceling the amount of the mortage.
a. How can the adjusted basis of the property be less then the amount of the mortage?
b. If the creditor's offer is accepted, what are the effects on the amount realized, the adjusted basis, and the realized gain or loss for Marge?
c. Does it matter in (b) if the mortage is recourse or nonrecourse?