Nat is a salesman for a real estate developer.His employer permits him to purchase a lot for $75,000.The employer's adjusted basis for the lot is $45,000,and its normal selling price is $90,000. What is Nat's recognized gain and his basis for the lot?
Recognized &emsp; &emsp; &emsp; gain Basis
$\begin{array}{ll}
\text { a. } \$ 0 & \$ 75,000 \
\text { b. } \$ 0 & \$ 90,000 \
\text { c. } \$ 15,000 & \$ 75,000 \
\text { d. } \$ 15,000 & \$ 90,000 \
\text { e. } \$ 30,000 & \$ 105,000
\end{array}$

Question

Nat is a salesman for a real estate developer.His employer permits him to purchase a lot for $75,000.The employer's adjusted basis for the lot is $45,000,and its normal selling price is $90,000. What is Nat's recognized gain and his basis for the lot?
Recognized &emsp; &emsp; &emsp;  gain Basis
$\begin{array}{ll}
\text { a. } \$ 0 & \$ 75,000 \
\text { b. } \$ 0 & \$ 90,000 \
\text { c. } \$ 15,000 & \$ 75,000 \
\text { d. } \$ 15,000 & \$ 90,000 \
\text { e. } \$ 30,000 & \$ 105,000
\end{array}$

Quizplus · Accepted Answer

Nat's recognized gain on the bargain purchase is $15,000 ($90,000 - $75,000)and his basis for the lot is $90,000 ($75,000 cost + $15,000 recognized gain).

Nat Is a Salesman for a Real Estate Developer