Identify the tax issue for the situation given and ascertain the possible tax consequences of each situation.

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Chapter 3, Problem 90IIP

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Identify the tax issue for the situation given and ascertain the possible tax consequences of each situation.

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Lucas writes a check to Paige for $250. The face of the check says, "pay to the order of Paige." Paige signs the check on the back and heads to the bank. Before Paige gets to the bank, however, Paige loses the check. Paige is not really worried, though, because the check is made out to her. If Carla finds the check and tries to cash it, Carla will: be able to cash the check because it is bearer paper. X be able to cash the check because it is order paper. be unable to cash the check because it is bearer paper. be unable to cash the check because it is order paper.

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Brian owns a duplex used as rental property. The duplex has a basis of $84,000 and $380,000 FMV. He transfers the duplex to Carrie,his sister, in exchange for a triplex that she owns. The triplex has a basis of $280,000 and a $380,000 FMV. Two months after the exchange, Carrie sells the duplex to a business associate for $395,000. Requirements Determine: a. Brian's realized and recognized gain on the exchange. b. Carrie's realized and recognized gain on the exchange. Requirement a. Determine Brian's realized and recognized gain on the exchange. Begin with the realized gain. First identify the formula, then enter the applicable amounts and calculate the realized gain. Amount realized (Brian) - Adjusted basis (duplex) = Realized gain $380,000 - $84,000 = $296,000 Determine Brian's recognized gain on the exchange. The recognized gain is $ .