Final answer:
In a like-kind exchange, the recognized gain is typically deferred. If any gain is recognized, such as through the receipt of 'boot', it is most commonly classified as a long-term capital gain, assuming the property was held for more than a year. The correct answer is '(d) long-term capital gain.'
Step-by-step explanation:
The character of the recognized gain from a like-kind exchange can be somewhat complex, depending on the specifics of the transactions involved. Fundamentally, a like-kind exchange is a transaction allowed under Internal Revenue Code Section 1031, which permits the deferral of capital gains taxes when a taxpayer exchanges one investment property for another of like kind. The key principle is that the properties exchanged must be used for business or investment purposes, not personal use.
Regarding the character of the recognized gain in a like-kind exchange, if all conditions of Section 1031 are met, the gain is generally deferred, meaning it is not recognized until the replacement property is eventually sold in a taxable transaction. However, if the exchange includes 'boot', which is additional non-like-kind property or cash received in the exchange, the boot is recognized as gain in the year of the exchange. This recognized gain would typically be classified as either ordinary income or capital gain, depending on what the boot consists of and the specifics of the exchange.
However, when we need to select the correct character from the provided options, the realized gain (if any must be recognized) is usually classified as a long-term capital gain if the exchanged properties were held for more than a year. This means that the correct answer here is generally '(d) long-term capital gain.' But it's important to note that certain conditions or receipt of boot might result in ordinary income if the exchange involves depreciable property that results in depreciation recapture. Additionally, the character of the gain can also differ based on the taxpayer's specific situation. Thus, for the sake of this question, without additional specifics, the most typical outcome would be considered.