Dana purchased an asset from her brother for $15,000.Her brother's basis was $20,000.If Dana sells the asset to an unrelated party for $12,000,she will recognize

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Dana's basis in the asset is her brother's basis of $20,000. If she sells it for $12,000, she will recognize a loss of $8,000 ($12,000 - $20,000 = -$8,000). However, since she purchased the asset from a related party (her brother), the loss is limited to the lesser of her basis or the fair market value of the asset at the time of the sale. Since the fair market value is $12,000, the loss is limited to $15,000 - $12,000 = $3,000. Thus, she will recognize a ($3,000) loss on the sale.

Dana Purchased an Asset from Her Brother for $15,000