LO.4, 5 Joyce owns undeveloped real estate with an adjusted basis of $120,000. She sells the real estate to her sister, Iris, for its fair market value of $115,000.

a. Calculate Joyce’s realized and recognized gain or loss.

b. If Iris later sells the real estate for $119,000, calculate her realized and recognized gain or loss.

c. Assume instead that Joyce sold the real estate to Iris for its fair market value of

$130,000. Calculate Joyce’s realized and recognized gain or loss.

d. Assume instead that Joyce sold the real estate to Hector, a friend, for its fair market value of $115,000. Calculate Joyce’s realized and recognized gain or loss.

e. Advise Joyce whether she should sell the real estate to Iris or Hector for its fair market value of $115,000.