Question

For the scenario described (d. $(1,000)), what is the recognized loss for Polly when the amount realized is $48,000 and the basis for the inherited property is $49,000?

A) $1,000
B) $48,000
C) $49,000
D) $(48,000)

Answer 1

Polly's recognized loss on the inherited property is calculated by subtracting the amount realized from the basis, which is $1,000.

Step-by-step explanation:

When calculating the recognized loss on inherited property, you must subtract the amount realized from the basis. Polly's basis for the inherited property is $49,000, and the amount realized from the sale is $48,000. To find the recognized loss, you subtract the amount realized ($48,000) from the basis ($49,000), which equals $1,000. Therefore, the recognized loss for Polly is $1,000.