Allan received $5,000 cash and an auto worth $15,000 in exchange for land that was encumbered by a $13,000 liability that the buyer assumed.
a. What is the amount realized on this sale?
b. If Allan had a basis of $34,000 in the land, what is his gain or loss on the sale?
c. If Allan has owned the land for five years as an investment, what is the character of the gain or loss?
d. How would your answer to (c) change if the land had been used by Allan's business as a parking lot?