Majoo Inherited Property from His Uncle on August 15,2014

question 42

Short Answer

Majoo inherited property from his uncle on August 15,2014.His uncle purchased the property on December 10,2012 for $100,000.At the date of his death,the property's FMV was $102,000.Majoo sold the property on September 30,2014 for $105,000.
a.What is the gain on the sale of the property?
b.What is the nature of the gain?

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Definitions:

Vertical Contracts

Arrangements between companies at different levels in the supply chain, such as manufacturers and retailers, to control the supply and price of products.

Benefits

Advantages or favorable outcomes resulting from specific actions, policies, or circumstances.

Promotional Activities

Efforts designed to inform, persuade, or remind potential buyers about a business's products or services, often to boost sales or brand awareness.

Free Ride

Benefit received without contributing to the cost of its production, often resulting in under-provision of goods or services if too many consumers opt to not pay.