Answer:
ABC
Realized Gain (loss) = ($300)
Recognized Gain (loss) = $0
Chris
Realized Gain (loss) = $8,000
Recognized Gain (loss) = $5,000
Explanation:
Seeing as Chris owns 70% of ABC Corp which is more than 50%, that would make them related parties. As they are related, certain Transaction must be treated differently.
In this scenario for instance, ABC sold Land to Chris, for this reason, they are not allowed to recognize any losses that occur from the sale.
ABC sold the land for $65,000 with a basis of $68,000.
= 65,000 - 68,000
= -$3,000
They REALIZED a loss of -$3,000. However they are not allowed to recognize this loss so the RECOGNIZED cost will be $0.
Chris then sells the land to an unrelated party for $73,000.
Chris's REALIZED GAIN is,
= 73,000 - 65,000 (the new basis)
= $8,000
However, because Chris is related to ABC Corp, he can deduct the original loss from his Realized gain.
= 8,000 - 3,000
= $5,000
Chris's RECOGNIZED gain is therefore $5,000.
