Subdivided Realty. (Obj. 2) Juan, an investor, subdivided an unimproved tract of land

that he acquired 20 years ago. In 2016, he sold four lots for $10,000 each. The basis of

each lot is $2,000, and the selling expenses are $400 per lot.

a. What is the gain or loss on these transactions, and how will it be taxed?

b. Assuming that Juan sells five more lots in 2017 at the same price with selling

expenses of $400 per lot, what will be the gain or loss, and how will it be taxed?