Question

For the scenario described (c. $69,130), what is the recognized gain when the amount realized is $120,000 and the adjusted basis is $50,870?

A) $0
B) $50,870
C) $69,130
D) $120,000

Answer 1

The recognized gain in a transaction is found by subtracting the adjusted basis ($50,870) from the amount realized ($120,000), which equals $69,130. Answer C) $69,130 is correct.

Step-by-step explanation:

The question is asking to calculate the recognized gain from a transaction in which there is an amount realized and an adjusted basis given. To find the recognized gain, subtract the adjusted basis from the amount realized. The calculation is as follows:
Amount Realized: $120,000
Adjusted Basis: $50,870
Recognized Gain = Amount Realized - Adjusted Basis
Recognized Gain = $120,000 - $50,870 = $69,130.
Therefore, the correct answer is C) $69,130.