Answer:
A. $126,500
B. $44,000
Explanation:
A. Calculation for What is the amount and character of Luke's recognized gain or loss on the building
First step is to calculate the Adjusted basis
Adjusted basis=$437,500-$91,500
Adjusted basis=$346,000
Now let calculate the Ordinary Gain / (Loss) recognized
Ordinary Gain / (Loss) recognized=$472,500-$346,000
Ordinary Gain / (Loss) recognized=$126,500
Therefore the amount and character of Luke's recognized gain or loss on the building will be $126,500
B . Calculation for What is the amount and character of Luke's recognized gain or loss on the land
Fair market value $221,000
Less Cost of land $177,000
Gain on sale of land ($44,000)
($221,000-$177,000)
Therefore the amount and character of Luke's recognized gain or loss on the land will be $44,000
