Twelve years ago, Marilyn purchased two lots in an undeveloped subdivision as an investment. Each lot has a $10,000 basis and a $40,000 FMV when the city condemns one lot for use as a municipal sewage treatment plant. As a result of the condemnation, Marilyn receives $40,000 from the city. Because the value of the other lot is reduced, the city pays $7,500 severance damages. She does not plan to replace the condemned lot. What is her:
a. Recognized gain due to the condemnation?
b. Recognized gain from the receipt of the severance damages?
c. Basis for the lot she continues to own?