Problem
Shenandoah Skies is the name of an oil painting by artist Kara Lee. In each of the following cases, determine the amount and character of the taxpayer's gain or loss on sale of the painting:
The taxpayer is Kara Lee, who sold her painting to the Reller Gallery for $6,000.
The taxpayer is the Reller Gallery, who sold the painting purchased from Kara to a regular customer for $10,000.
The taxpayer is Lollard, Inc., the regular customer that purchased the painting from the Reller Gallery. Lollard displayed the painting in the lobby of its corporate headquarters until it sold Shenandoah Skies to a collector from Dallas. The collector paid $45,000 for the painting.