Question

Russell Corporation sold a parcel of land valued at $442,500. Its basis in the land was $274,350. For the land, Russell received $76,500 in cash in year 0 and a note providing that Russell will receive $265,000 in year 1 and $101,000 in year 2 from the buyer.

a. What is Russell’s realized gain on the transaction?

b. What is Russell’s recognized gain in year 0, year 1, and year 2?

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Deirdre sold 175 shares of stock to her brother, James, for $4,550. Deirdre purchased the stock several years ago for $5,950. (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)

a. What gain or loss does Deirdre recognize on the sale?

b. What amount of gain or loss does James recognize if he sells the stock for $6,475

d. What amount of gain or loss does James recognize if he sells the stock for $3,850?

Answer 1