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sells the land on December 1 of the current year for its fair market value of $200,000. How muc each recognize on this series of transactions? Choose the correct answer. O A. Jacob, $32,500; Tabitha, $11,500

sells the land on December 1 of the current year for its fair market value of $200,000. How muc each recognize on this series of transactions? Choose the correct answer. O A. Jacob, $32,500; Tabitha, $11,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jacob has a parcel of vacant land that he had purchased as an investment. The land has an adjusted cost base of $156,000 to Jacob. The fair market value of the land on January 1 of the current taxation year is $167,500. On this date, Jacob gifts the property to his 14-year-old daughter, Tabitha. Tabitha subsequently sells the land on December 1 of the current year for its fair market value of $200,000. How much gain will each recognize on this series of transactions? Choose the correct answer. O A. Jacob, $32,500; Tabitha, $11,500 O B. Jacob, $44,000; Tabitha So C. Jacob, $11,500; Tabitha, $32,500 O D. Jacob, $0; Tabitha, 544,000
Transcribed Image Text:Jacob has a parcel of vacant land that he had purchased as an investment. The land has an adjusted cost base of $156,000 to Jacob. The fair market value of the land on January 1 of the current taxation year is $167,500. On this date, Jacob gifts the property to his 14-year-old daughter, Tabitha. Tabitha subsequently sells the land on December 1 of the current year for its fair market value of $200,000. How much gain will each recognize on this series of transactions? Choose the correct answer. O A. Jacob, $32,500; Tabitha, $11,500 O B. Jacob, $44,000; Tabitha So C. Jacob, $11,500; Tabitha, $32,500 O D. Jacob, $0; Tabitha, 544,000
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