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. Bob owned a duplex used as rental property. The duplex had an adjusted basis to...

. Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000. How much, if any, gain or loss did Carl recognize with respect to the transaction with Bob?   EXPLAIN WHY AND WHICH CODE SEC BASES YOUR ANSWER?

a.   No gain or loss was recognized.

b.   $21,000 gain was recognized.

c.    The transfer by Bob to Carl was a gift.

d.    None of the above is correct.

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Answer #1

Ans:The correct option for the above answer is option D i.e None of the above is correct

Duplex adjusted value= $86,000

Sale value of duplex= $312,000

Fair market value(FMV)= $300,000

Recognized gain= $12,000

Gain= consideration / Sale value of duplex- fair market value

= $312,000-$300,000

=$12,000

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