1) Alan Meer inherits a hotel from his grandmother, Mary, on February 11 of the current year. Mary bought the hotel for $730,000 three years ago. Mary deducted $27,000 of cost recovery on the hotel before her death. The fair market value of the hotel in February is $725,000. (Assume that the alternative valuation date is not used.)

a. What is Alans adjusted basis in the hotel?

b. If the fair market value of the hotel at the time of Marys death was $500,000, what is Alans basis?

2) Sue has 5,000 shares of Sony stock that have an adjusted basis of $27,500. She sold the 5,000 shares of stock for cash of $10,000, and she also received a piece of land as part of the proceeds. The land was valued at $20,000 and had an adjusted basis to the buyer of $12,000.

What is Sue's gain or loss on the sale of 5,000 shares of Sony stock?