Joe received a parcel of land as a gift from his sister,Lisa,in 2009.At the time of the gift,the land had a FMV of $10,000.Lisa purchased the land in 2005 for $13,000.If Joe sells the land in 2014 for $22,450,he will report a

Question

Quizplus · Accepted Answer

When Joe sells the land, he will report a capital gain. The basis of the land for Joe is the same as it was for Lisa, which is $13,000. Since Joe received the land as a gift, his basis is equal to Lisa's basis at the time of the gift, or $10,000. When Joe sells the land for $22,450, he will have a capital gain of $12,450 ($22,450 - $10,000). Therefore, the correct answer is B.

Joe Received a Parcel of Land as a Gift from His