Majoo Inherited Property from His Uncle on August 15,2016

question 98

Short Answer

Majoo inherited property from his uncle on August 15,2016.His uncle purchased the property on December 10,2014 for $100,000.At the date of his death,the property's FMV was $102,000.Majoo sold the property on September 30,2016 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:

Long-run Supply Curve

A graphical representation that shows the relationship between the market price of a product and the quantity supplied by all firms in the long run when all inputs can be varied.

Competitive Market

A market structure characterized by many buyers and sellers, where no single participant has the power to significantly influence prices for homogeneous products.

Production Resource

Resources used in the creation of goods and services; these include land, labor, capital, and entrepreneurship.

Market Price

The present cost for purchasing or selling a product or service in a market setting.