What does Rachel include in Gross Income

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Question - Rachel, a medical doctor, purchases a painting to hang on the wall of her living room (i.e. a., for personal enjoyment) for $15,000 in February of Year 1 from an up-and-coming artist, Randy Borehall. At the end of Year 1, the painting is appraised at $17,000. At the end of Year 2, after a particularly nasty piece of publicity regarding Borehall's antics, the painting is appraised at $10,000. When Borehall dies in Year 3, Rachel is able to sell the painting in November for $20,000 in cash (you know what death can do to the value of an artist's work) to Jacob. What does Rachel include in Gross Income (or deduct in reaching Taxable Income) in each of Years 1, 2, and 3 under current law?

Reference no: EM132905738

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