Question - During the current year, Mike sells a tract of land for $800,000 that he had received from Ida on March 10, 1995, when the land had a FMV of $310,000. The taxable gift was $300,000 because the annual exclusion was $10,000 in 1995. Ida purchased the land on April 12, 1980, for $110,000. On the date of the gift, Ida paid a gift tax of $12,000. Mike paid a sales commission to his broker of $16,000 to sell the land.
a) What is Mike's realized gain on the sale?
b) How would your answer to part (a) change, if at all, if the FMV of the gift property were $85,000 on the date of the gift?