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The Fair Market Value of Property Received in a Sale

question 31

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The fair market value of property received in a sale or other disposition is the price at which property will change hands between a willing seller and a willing buyer when neither is compelled to sell or buy.


Definitions:

Recognized Gain

The profit realized from the sale or exchange of an asset over its adjusted basis.

Adjusted Basis

The net cost of an asset after adjusting for various tax-related items, such as improvements and sales.

Fair Market Value

The estimated price an asset would fetch in the marketplace, subject to the willingness of both buyer and seller.

Recognized Loss

A loss on an investment that has been sold for less than its purchase price, which can be used to offset capital gains for tax purposes.

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