Amount realized, in US federal income tax law, is defined by section 1001(b) of Internal Revenue Code. It is one of two variables in the formula used to compute gains and losses to determine gross income for income tax purposes. The excess of the amount realized over the adjusted basis is the amount of realized gain (if positive) or realized loss (if negative). Computation of gain and loss is governed by section 1001(a) of the Code. Statutory definition Section 1001(b) defines the amount realized as "the sum of any money received plus the fair market value of the property (other than money) received." Generally, it is the value of what the taxpayer receives in the exchange. Calculating amount realized To have an "amount realized" there must be a kind of exchange, known as a "realization event." The first step in calculating the amount realized is determining when an exchange that qualifies as a "realization event" has occurred. Section 1001 requires that it be an exchange through which the taxpayer receives money or other property. In Helvering v. Bruun, the United States Supreme Court has held that a "[g]ain may occur as a result of exchange of property, payment of the taxpayer's indebtedness, relief from a liability, or other profit realized from the completion of a transaction." More clearly, the Supreme Court lists four events that trigger realization of gain or loss: 1) a property exchange, 2) relief of a legal obligation owed to a third party, 3) relief of a legal obligation owed to the party receiving property, or 4) other profit transactions. A good illustration for determining realization for income tax purposes is stock. For example, at the beginning of the taxable year, Sally buys stock in XYZ Corp. for $10 per share. By the end of the taxable year, Sally's stock in XYZ Corp. is worth $20 a share. Would Sally have to report the appreciation in her stock as taxable income? Because Sally has not sold her stock (or otherwise exchanged it), she has not realized the stock's appreciation. If Sally had sold the stock in XYZ Corp. at $20 per share, the sale would be a realization event, and Sally would recognize income (in this case, a gain). Realization would also occur if Sally exchanged her stock for a new car or for a certain amount of services. In a transaction where property is exchanged for