Joe received a parcel of land as a gift from his sister,Lisa,in 2012.At the time of the gift,the land had a FMV of $20,000.Lisa purchased the land in 2008 for $23,000.If Joe sells the land in 2017 for $32,450,he will report a

Question

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When Joe sells the land, he will report a capital gain. To calculate the gain, we need to determine Joe's basis in the land, which is the amount Lisa originally paid for it: $23,000. When Joe sells the land for $32,450, he will realize a gain of $9,450 ($32,450 - $23,000). Since Joe has held the land for more than one year, the gain will be treated as a long-term capital gain. Therefore, the correct answer is option B: $9,450 capital gain.

Joe Received a Parcel of Land as a Gift from His