Answer:
The correct option is;
Her recognized <u>loss </u>is ($1,000)
Step-by-step explanation:
The given information are;
The basis of the land to the decedent = $95,000
The land's market value on 4th of August 2018 when the decedent died = $50,000
The alternate valuation date = 6 months + The date of death of the decedent = 4th February, 2019
The value filed by the executor on the tax return using the alternate valuation date = The market value of the estate on 4th of February 2019
The market value of the land on 4th of February 2019 = $45,000
∴ The value filed by the executor on the tax return using the alternate valuation date = $45,000
The value of the land on November 12, 2018 when the executor distributed the land to Kelly = $49,000
The value at which Kelly sells the land on June 10, 2019 = $48,000
Given that, recognized gain is the profit made from selling an asset based on the value of the asset when it was obtained, we have;
Kelly's recognized gain or loss = (The value at which Kelly sells the land) - (The value of the land when the executor distributed the land to Kelly)
Kelly's recognized gain or loss = $48,000 - $49,000 = -$1,000 = ($1,000)
Therefore, Kelly's recognized loss = ($1,000).
