Question

In 2017, Holly received a gifted land from her aunt (donor's adjusted basis was $98,000) and the fair market value was $112,000 on the date of gift. This year, Holly sold this land for $102,000. What is Holly's basis in the land and her recognized gain or loss?

A. $98,000, and a gain of $4,000B. $112,000, and a loss of $10,000C. $102,000, and a gain of $4,000D. $102,000, and no gain and loss is recognized.E. None of these.

Answer 1

Correct answer is A.

Holly's basis is $98,000

Recognized Gain is $4,000

Step-by-step explanation:

Holly's basis = Carryover basis = $98,000

Recognized gain = Sale value - Basis

= $102,000 - $98,000

= $4,000