Kathleen Received Land as a Gift from Her Grandfather

question 891

Multiple Choice

Kathleen received land as a gift from her grandfather. At the time of the gift, the land had a FMV of $105,000 and an adjusted basis of $85,000 to Kathleen's grandfather. The grandfather did not have any gift taxes due. One year later, Kathleen sold the land for $110,000. What was her gain or (loss) on this transaction?

• A) ($5,000)
• B) no gain or loss
• C) $20,000
• D) $25,000