R sold the family homestead to his daughter for $250,000 at a time when its fair market value was $400,000.R's basis was $130,000.How much gain does R realize on the transaction?

Question

Quizplus · Accepted Answer

R realizes a gain of $120,000 on the transaction, which is calculated by subtracting his basis ($130,000) from the amount he sold the property for ($250,000). The fair market value is not relevant for calculating the realized gain in this transaction.

R Sold the Family Homestead to His Daughter for $250,000