What type of gain does Carl experience from the transfer of land to Cardinal Corporation?

To determine the type of gain Carl experiences from transferring land to Cardinal Corporation, it is essential to understand the concepts of realized and recognized gains.

A realized gain occurs when a taxpayer sells or exchanges an asset for more than its adjusted basis, effectively providing the taxpayer with economic benefit. In Carl's case, if the fair market value of the land exceeds its adjusted basis by $90,000, then he realizes this gain from the transaction.

On the other hand, a recognized gain is the portion of the realized gain that is reported on a tax return and subject to taxation. In certain transactions, such as the transfer of assets to a corporation, there are specific tax rules (like Section 351) that might defer the recognition of gains under certain conditions.

In this question, since Carl's gain from the transfer is classified as a realized gain of $90,000, it indicates that he has an economic benefit from the exchange. While it is possible that a portion of this gain could be recognized for tax purposes depending on the specifics of the transfer, the fact that the realized amount is highlighted indicates that this is the primary figure being addressed.

Thus, stating that Carl has a realized gain of $90,000 captures the essence of the economic impact of the