Bess gave her grandson ten acres of undeveloped land. Bess' tax basis in the land was $35,000, and its fair market value at date of gift was $175,000. Two years after receiving the land, the grandson sold it for $200,000. Compute his recognized gain on sale.

Question

Quizplus · Accepted Answer

The grandson's basis in the land is the same as Bess' basis, which is $35,000. The recognized gain is the selling price ($200,000) minus the basis ($35,000), resulting in a gain of $165,000.

Bess Gave Her Grandson Ten Acres of Undeveloped Land