10-1
Realized gain or loss is the difference between the amount realized from the sale or other disposition of property and the adjusted basis at the time of sale or disposition. If the amount realized exceeds the adjusted basis, there is a realized gain. If the adjusted basis exceeds the amount realized, there is a realized loss. If a realized gain or loss is recognized, the gain is includible and the loss is deductible in determining taxable income. Thus, ‘‘recognition'' means that the result of a particular transaction is considered to be taxable income or a deductible loss.

10-47
Basis per share of stock purchased on April 18, 2012: $7 ($210 ÷ 30).
Basis per share of stock purchased on September 29, 2012: $10 ($900 ÷ 90).
Sale on November 28, 2012: 30 shares (all of 4-18-12 purchase) $ 210
18 shares (18 of 9-29-12 purchase) 180
Basis under FIFO $ 390
Selling price $ 576
Less: Basis 390
Gain $ 186
Sale on December 8, 2012: Selling price $ 188
Less: Basis (25 × $10) 250
Loss ( $ 62)
Combining the two sales: Gain $ 186
Loss ( 62)
Net gain $ 124

11-40

Debbie has realized gain of $3,000, recognized gain of $3,000, and the basis of the new property is $10,500.
FMV received ($10,500 + $4,500) $15,000
Less: Basis given 12,000
Gain realized $ 3,000
Gain recognized $ 3,000

Method I: Basis of old property $12,000
Plus: Gain recognized 3,000
Less: Boot received 4,500
Basis of new property $10,500

Method II: FMV of property received $10,500
Less: Deferred gain 0
Basis of new property $10,500

Elizabeth has $1,500 gain realized, no recognized gain, and the basis of her property is $13,500.
FMV received $15,000
Less: Basis given ($9,000 + $4,500) 13,500
Gain