Nikeya sells land (adjusted basis of 120,000) to her adult son, Shamed, for its appraised value of95,000. Which of the following statements is correct?
1) Nikeya will recognize a loss of $25,000 on the sale.
2) Nikeya will recognize a gain of $25,000 on the sale.
3) Nikeya will not recognize any gain or loss on the sale.
4) The adjusted basis of the land for Shamed will be $95,000.