Video: Gain Recognized on Property Received as Compensation

In this lesson, Nick Palazzolo, CPA, delves into the intricacies of recognizing gain when property is received as compensation. Through the story of John, who receives stock in lieu of cash for services rendered, Nick demystifies the process of calculating the adjusted basis and the amount realized from the sale of such stock. He clarifies the differences between gain realized and gain recognized, with an eye toward the importance of adhering to IRS rules. Nick makes sure to highlight the consequential details of such transactions, using clear examples to illustrate how these gains should be accurately reported on tax returns.