Maria meets all of the requirements of 1237 (subdivided realty). In 2022, she begins selling lots

Question:

Maria meets all of the requirements of § 1237 (subdivided realty). In 2022, she begins selling lots and sells four separate lots to four different purchasers. She also sells two contiguous lots to another purchaser. The sales price of each lot is $30,000. Maria’s basis for each lot is $15,000. Selling expenses are $500 per lot.

a. What are the realized and recognized gain?

b. Explain the nature of the gain (i.e., ordinary income or capital gain).

c. Would your answers change if, instead, the lots sold to the fifth purchaser were not contiguous? If so, how?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

South Western Federal Taxation 2023 Comprehensive Volume

ISBN: 9780357719688

46th Edition

Authors: Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young

Question Posted: