Question

Maria meets all of the requirements of § 1237 (subdivided realty). In 2018, she begins selling lots and sells four separate lots to four different purchasers. She also sells two contiguous lots to another purchaser. The sales price of each lot is $30,000. Maria's basis for each lot is $15,000. Selling expenses are $500 per lot. a. What are the realized and recognized gain? The realized gain is $____ and recognized gain is $____. What is the nature of the gain (i.e., ordinary income or capital gain)? The gain is considered a long-term capital gain. Assume instead that the lots sold to the fifth purchaser were not contiguous. If the lots sold to the fifth purchaser were not contiguous, Maria would have $ _______ordinary income, and the $_______ gain would be long-term capital gain.

Answer 1

Answer:

a. What are the realized and recognized gain?

Sales price(6 lots $30000)=$180,000.

Sales expenses(6 lots of $500)=$3000

Amount realised=$177000

less:Basis(6 lots of $15000)=$90,000.

Realised and recognised gain=$90000-$3000=$87,000.

b)What is the nature of the gain

The entire realized and recognised gain is $87,000 is long term capital gain from the sale of first five lots. the adjust lots sold to a single purchaser are considered to be one lot. therefore 5 slots were sold.

Assume instead that the lots sold to the fifth purchaser were not contiguous. If the lots sold to the fifth purchaser were not contiguous,

on the off chance that the two parcels sold to the fifth buyer were not touching the aggregate parts sold would be six instead of five. since maria has how currently sold at least six parcels 5% of the aggregate offering cost of all parts sold in 2011. is treated as normal income.this standard pay is balanced by any associated wth seloing the lots