A Strip Along the Boundary of Joy's Land Is Condemned

Multiple Choice

A strip along the boundary of Joy's land is condemned for a utility easement. She receives a payment of $7,500 from the utility company. Her basis in the land is $80,000. Which of the following is correct?

A) Joy must include the $7,500 in gross income.
B) Joy must reduce the basis of the land by $7,500.
C) Joy must include the $7,500 in the gross income and increase the basis of the land by $7,500.
D) Only a. and c. are correct.
E) a., b., and c. are correct.