Lee sells equipment (basis $10,000) to related party, Lee Construction Inc., for $6,000. The $4,000 loss is:
A. Deductible by Lee on his individual return.
B. Not deductible by Lee but Lee Construction has a basis of $6,000 in the asset.
C. Not deductible by Lee but Lee Construction has a basis of $10,000 in the asset.
D. None of these.
Answer: B
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