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On January 10, 2019, Wally Sold an Option for $2,000

question 44

Essay

On January 10, 2019, Wally sold an option for $2,000 on vacant land he held as an investment.He had purchased the land in 2015 for $76,000.The option allowed the option holder to purchase the property for $122,000 plus the cost of the option.On March 1, 2019, the option holder exercised the option.What is the amount and nature of Wally's gain or loss from disposition of the land?


Definitions:

Buyout Price

The predetermined amount of money required to purchase all or a specified percentage of ownership in a company or asset.

Dissociation

The process by which a member's involvement in an entity or partnership is terminated, often involving the alteration of the entity's legal and financial relationships.

Operating Agreement

A legal document outlining the governance and business operations of an LLC, agreed upon by its members.

LLC Statue

Probably intended to be "LLC Statute," which refers to the laws that govern the formation, operation, and dissolution of Limited Liability Companies.

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