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

question 86

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)
• E) None of the above

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Definitions:

Hypothesis

An assumption or proposition that is made on the basis of limited evidence as a starting point for further investigation.

Experimentation

The process of trying out new ideas, concepts, or strategies to test hypotheses and gain insights that can lead to innovation or improvement.

Careful

Paying close attention to detail and being cautious to avoid mistakes or accidents.

Experience

The knowledge or skill acquired by a period of practical involvement in or exposure to events.