Sarah Purchased a Diamond Bracelet for $3,000 While Vacationing in Hong

Sarah purchased a diamond bracelet for $3,000 while vacationing in Hong Kong during 2008. Sarah gives the bracelet to her daughter Amy when she graduates from college in 2018. The bracelet is appraised at $8,000 on that date. In October 2018, Amy sells the bracelet for $9,000. What is the amount of gain Amy should recognize on the sale?

A) No gain or (loss) is recognized
B) $1,000
C) $4,000
D) $5,000
E) $6,000

Correct Answer:

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