Art, an unmarried individual, transfers property (basis of $130,000 and fair market value of $120,000) to condor corporation in exchange for $1244 stock. the transfer qualifies as a nontaxable exchange under $ 351. because the property is loss property, condor takes a basis in the property of $120,000. five years later, art sells the condor stock for $50,000. with respect to the sale, art has:
a. an ordinary loss of $80,000.
b. an ordinary loss of $70,000 and a capital loss of $10,000.
c. a capital loss of $80,000.
d. a capital loss of $30,000 and an ordinary loss of $50,000.
e. none of the above.

Kandon enterprises, inc., has two operating divisions; one manufactures machinery and the other breeds and sells horses. both divisions are considered separate components as defined by generally accepted accounting principles. the horse division has been unprofitable, and on november 15, 2018, kandon adopted a formal plan to sell the division. the sale was completed on april 30, 2019. at december 31, 2018, the component was considered held for sale. on december 31, 2018, the company’s fiscal year-end, the book value of the assets of the horse division was $415,000. on that date, the fair value of the assets, less costs to sell, was $350,000. the before-tax loss from operations of the division for the year was $290,000. the company’s effective tax rate is 40%. the after-tax income from continuing operations for 2018 was $550,000. required: 1. prepare a partial income statement for 2018 beginning with income from continuing operations. ignore eps disclosures. 2. prepare a partial income statement for 2018 beginning with income from continuing operations. assuming that the estimated net fair value of the horse division’s assets was $700,000, instead of $350,000. ignore eps disclosures.