Choice "C" is correct. No taxable gain or loss will be recognized on a like-kind exchange if both assets are tangible property. Rental real estate located in different states qualifies for a like-kind exchange.
Choices "b", "d", and "a" are incorrect. In order to meet the "like-kind exchange" requirements for nonrecognition of gain or loss, the property exchanged must be tangible property. Convertible debentures, convertible preferred stock, and partnership interests are not considered tangible property.Exception: If the same class of stock of the same corporation is exchanged, it will qualify for "substituted basis."