Question: Amy purchases a house for $ 5 5 , 0 0 0 . She converts the property to rental property when the fair market value

Amy purchases a house for $55,000. She converts the property to rental property when the fair market value is $115,000. After deducting cost recovery expense of $4,130, she sells the house for $120,000 to an unrelated party. Which of the following is true about the current year tax reporting?
$37,375 recognized gain or loss by Amy
$69,130 recognized gain or loss by Amy
Loss is excluded.
115,870 recognized gain or loss by Amy
Amy purchases a house for $ 5 5 , 0 0 0 . She

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