The Bank Forecloses on Lisa's Apartment Complex

question 41

Multiple Choice

The bank forecloses on Lisa's apartment complex. The property had been pledged as security on a nonrecourse mortgage, whose principal amount at the date of foreclosure is $750,000. The adjusted basis of the property is $480,000, and the fair market value is $750,000. What is Lisa's recognized gain or loss?

• A) $270,000
• B) ($750,000)
• C) $0
• D) ($480,000)
• E) None of the above

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Definitions:

Commercial Entities

Organizations engaged in commercial activities, aiming to generate profits from their operations.

Pre-money Valuation

The valuation of a company immediately before it goes through a round of financing or receives external funding.

Post-money Valuation

The estimated value of a company after external financing and injections of equity have been added to its balance sheet.

Angel

A wealthy person who funds a new business, typically in return for convertible debt or a share in the company's equity.