Noelle received dining room furniture as a gift from her friend,Jane.Jane's adjusted basis was $9,200 and the fair market value on the date of the gift was $7,000.Noelle decided she did not need the furniture and sold it to a neighbor six months later for $6,500.What is her recognized gain or loss?

Question

Quizplus · Accepted Answer

Noelle has a loss basis of $7,000 (the lower of the adjusted basis of $9,200 or the fair market value of $7,000 on the date of the gift)for the furniture.Therefore,sale proceeds of $6,500 result in a realized loss of $500 ($6,500 amount realized - $7,000 adjusted basis).This is a loss on a personal asset and is not recognized.

Noelle Received Dining Room Furniture as a Gift from Her