in wiley regs study guide, it states that "boot given in the form of an assumption of a liability does __not__ offset boot received in the form of cash or unlike property; *however*, boot given in the form of cash or unlike property __does__ offset boot received in the form of a liability assumed by the other party."

these are the facts in the example that wiley uses:

- A owns investment land with adjusted basis of $50,000 & FMV of $70,000, subject to $15,000 mortgage

- B owns investment land with adjusted basis of $60,000 & FMv of $65,000, subject to $10,000 (part 1)/$6,000 (part 2) mortgage

- A & B exchange real estate investments with A assuming B's mortgage and B assuming A's mortgage

- A pays B cash of $4,000 (part 2)

in part 1 of the example: A has a $20,000 gain realized, but only $5,000 recognized and a basis on new investment of $50,000. B has a $5,000 gain realized, but $0 gain recognized and a basis of $65,000 on new investment. i understand this part.

however, in part 2 of the example, the mortgage on B's investment land is now $6,000 and B receives $4,000 in cash from A. wiley does not explain how it calculates that B must recognize a gain of $4,000 and will have a basis of $69,000 for new investment or that the tax effects to A remain unchanged. can someone help me by breaking down the calculations. for B i can get the math to work, but i'm not sure of the reasoning:

$70k FMV + $6k boot rec'd + $4k cash boot = $80k realized on exchange

$80k realized - $60k basis - $6k boot rec'd = $14k gain realized

$14k gain realized - $10k boot given = $4k gain

sorry if this is an easy problem. :x