Question

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?

Answer 1

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

Step-by-step 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