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14 July, 08:37

Lisa sells business property with an adjusted basis of $237,800 to her son, Alfred, for its fair market value of $190,240. If an amount is zero, enter "0".

a. What is Lisa's realized and recognized gain or loss?

b. What is Alfred's recognized gain or loss if he subsequently sells the property for $261,580? For $154,570?

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  1. 14 July, 09:51
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    a. Lisa's realized and recognized gain or loss is unknown

    b. Alfred's recognized gain of $71,340 if he subsequently sells the property for $261,580

    Alfred's recognized loss of $35,670 if he subsequently sells the property for $154,570

    Explanation:

    a. We do not know the amount Lisa costed to buy this business property, thus can't define her gain or loss.

    b. Alfred cost $190,240 to buy this property, the he will gain if sell higher or lost if sell lower.

    The gain $71,2340 = selling price $261,580 - cost $190,240

    The loss $35,670 = selling price $154,570 - cost $190,240
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