Horace sells equipment with an adjusted basis of $20,000 to his great-grandson, matthew, for its fair market value of $15,000. matthew sells the equipment to an unrelated party for $17,000. what are matthew’s realized and recognized gains (losses) upon the sale?

The recognized gains upon the sale is $2000.

Explanation:

As the cost of purchase of the equipment to Mathew is $15000 and the sale proceeds received is $17000. The gain is actually calculated as follows;

Gain = Sale proceeds –Cost of equipment  

Gain = Matthew sells the equipment to an unrelated party for $17,000 – Matthew bought equipment for its fair market value of $15,000

Which is $1700 -$1500 = $2000

Therefore the recognized gains upon the sale is $2000.  

answer; that person may have a larger tax bill to pay on income taxes;

agriculture and oil. natural resources, industry.