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Question - Allan received $5,000 cash and an auto worth $15,000 in exchange for land encumbered by a $13,000 liability that the buyer assumed.
a. What is the amount realized on this sale?
b. If Allan had a basis of $34,000 in the land, what is his realized gain or loss on the sale?
c. If Allan has owned the land for ?ve years as an investment, what is the character of the recognized gain or loss?
d. How would your answer to (c) change if the land had been used by Allan's business as a parking lot?
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The Elm Institute makes portable tents for hikers. Their tents have a standard materials usage of 4 yards of cloth per tent at $7.00 per yard.
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