A Strip Along the Boundary of Joy's Land Is Condemned

question 103

Multiple Choice

A strip along the boundary of Joy's land is condemned for a utility easement. She receives a payment of $7,500 from the utility company. Her basis in the land is $80,000. Which of the following is correct?

• A) Joy must include the $7,500 in gross income.
• B) Joy must reduce the basis of the land by $7,500.
• C) Joy must include the $7,500 in the gross income and increase the basis of the land by $7,500.
• D) Only a. and c. are correct.
• E) a., b., and c. are correct.

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