In 2012, Bob Brown's Aunt Barbara Gave Him a House

question 54

Multiple Choice

In 2012, Bob Brown's aunt Barbara gave him a house. At the time of the gift, the house had a fair market value of $193,000, the taxable gift was $180,000, and his aunt's adjusted basis was $73,000. His aunt paid a gift tax of $30,000 on the house. What is Bob's basis in the house for purposes of determining gain?

• A) $73,000
• B) $93,000
• C) $180,000
• D) $193,000

Understand the basic concept of asymmetric information and its impact on market transactions.

Recognize adverse selection and moral hazard problems in various markets.

Identify mechanisms like market signaling and government intervention to mitigate asymmetric information issues.

Relate the concepts of risk aversion, risk neutrality, and risk-loving to decision-making under uncertainty.

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Definitions:

Performance Productivity

Measures the efficiency of production in terms of output per unit of input, often used to assess workforce effectiveness.

Team Cohesion

it involves the extent to which team members stick together and remain united in pursuing their goals and objectives.

Clearly Defined Goals

Specific, explicit, and unambiguous objectives set forth for individuals or teams to aim for, facilitating focused efforts and clearer benchmarks for performance.

Great Teamwork

The effective and harmonious collaboration and cooperation among team members to achieve common goals.