Paul Sells Property with an Adjusted Basis of $45,000 to His

question 6

Multiple Choice

Paul sells property with an adjusted basis of $45,000 to his daughter Dean for $38,000.Dean subsequently sells the property to her brother, Preston, for $38,000.Three years later, Preston sells the property to Hun, an unrelated party, for $50,000.What is Preston's recognized gain or loss on the sale of the property to Hun?

• A)$0
• B)$5,000
• C)$12,000
• D)($5,000)

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Definitions:

UCC

The Uniform Commercial Code represents a detailed collection of statutes that regulate business dealings across the United States.

Consideration

A basic principle in contract law regarding the exchange of something valuable between parties forming a contract.

Merchant

An individual or business that deals in goods, or conducts activities covered by commercial laws.

Restatement

A summary or new statement of previously stated facts or statements.