Exercise 13-31 (Algorithmic) (LO. 4) Lisa sells business property with an adjusted basis of $159,600 to her son, Alfred, for its fair market value of $127,680. If an amount is zero, enter "0". a. What is Lİsa's realized and recognized gain or loss? Lisa has a $ 31,920 V realized loss V of which V is recognized. b. What is Alfred's recognized gain or loss if he subsequently sells the property for $175,560? For $103,740? If Alfred sells the property for $175,560, he has a recognized gain v of $ х. If Alfred sells the property for $103,740, he has a recognized loss V of: х.
Exercise 13-31 (Algorithmic) (LO. 4) Lisa sells business property with an adjusted basis of $159,600 to her son, Alfred, for its fair market value of $127,680. If an amount is zero, enter "0". a. What is Lİsa's realized and recognized gain or loss? Lisa has a $ 31,920 V realized loss V of which V is recognized. b. What is Alfred's recognized gain or loss if he subsequently sells the property for $175,560? For $103,740? If Alfred sells the property for $175,560, he has a recognized gain v of $ х. If Alfred sells the property for $103,740, he has a recognized loss V of: х.
Chapter15: Property Transactions: Nontaxable Exchanges
Section: Chapter Questions
Problem 36P
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Transcribed Image Text:Exercise 13-31 (Algorithmic) (LO. 4)
Lisa sells business property with an adjusted basis of $159,600 to her son, Alfred, for its fair market value of $127,680.
If an amount is zero, enter "0".
a. What is Lisa's realized and recognized gain or loss?
Lisa has a $
31,920
V realized loss
- v of which
V is recognized.
b. What is Alfred's recognized gain or loss if he subsequently sells the property for $175,560? For $103,740?
If Alfred sells the property for $175,560, he has a recognized gain
- v of $
х.
If Alfred sells the property for $103,740, he has a recognized loss
- v of $
X .
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The loss disallowance rules are designed to achieve two objectives. First, the rules prevent a taxpayer from directly transferring an unrealized loss
to a related taxpayer in a higher tax bracket who could receive a greater tax benefit from recognition of the loss. Second, the rules eliminate a
substantial administrative burden on the Internal Revenue Service as to the appropriateness of the selling price (fair market value or not).
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