Arthur Owns a Tract of Undeveloped Land (Adjusted Basis of $145,000)

question 85

Multiple Choice

Arthur owns a tract of undeveloped land (adjusted basis of $145,000) which he sells to his son, Ned, for its fair market value of $105,000. What is Arthur's recognized gain or loss and Ned's basis in the land?

• A) $0 and $105,000.
• B) $0 and $145,000.
• C) ($40,000) and $105,000.
• D) ($40,000) and $145,000.
• E) None of the above.

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Definitions:

Placenta

An organ in pregnant female mammals that nourishes and maintains the fetus through the umbilical cord.

Proximodistal Development

A pattern of growth where physical development starts at the center of the body and moves towards the extremities.

Diethylstilbestrol

A synthetic estrogen that was prescribed between 1940 and 1971 to prevent pregnancy complications, later found to cause health issues in the children of the women who took it.

Teratogens

Agents or factors that can cause congenital abnormalities or birth defects in an embryo or fetus when exposed during pregnancy.