Spiro was leasing an apartment from Grey,Inc.Grey paid Spiro $11,000 to cancel his lease and move out so that Grey could demolish the building.As a result:

Question

Quizplus · Accepted Answer

When one entity pays another entity to cancel a lease and move out, it is considered a sale of the leasehold interest. Therefore, Spiro has received $11,000 for selling his leasehold interest and has a capital gain of $11,000. Grey, on the other hand, would have a capital loss if they paid Spiro to cancel the lease and demolish the building, but in this scenario, Grey paid Spiro to cancel the lease and move out, which means Grey has no capital gain or loss. Therefore, the answer is A.

Spiro Was Leasing an Apartment from Grey,Inc