Courtney sells a cottage at the lake that the family had used for their summer vacations. The purchaser paid Courtney $100,000 and assumed the mortgage which had a principal balance of $50,000. Courtney had purchased the cottage five years ago for $170,000. Courtney will recognize
A) a gain of $20,000.
B) no gain or loss.
C) a loss of $70,000.
D) a loss of $20,000.
B) no gain or loss.
A loss of $20,000 is realized, but the cottage is a personal-use asset, and losses on personal-use assets cannot be recognized.
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