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12 February, 13:35

Shontelle owns an apartment house that has an adjusted basis of $760,000 but is subject to a mortgage of $192,000. She transfers the apartment house to Dave and receives from him $120,000 in cash and an office building with a fair market value of $780,000 at the time of the exchange. Dave assumes the $192,000 mortgage on the apartment house. What is Shontelle's realized gain or loss?

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  1. 12 February, 14:02
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    Realized gain of Shontelle = $332000

    Explanation:

    given data

    adjusted basis = $760,000

    mortgage = $192,000

    receives cash = $120,000

    fair market value = $780,000

    to find out

    What is Shontelle realized gain or loss

    solution

    we find here first Realized gain that is express as

    Realized gain = Amount realized - Adjusted basis ... 1

    so here Amount realized = (receives cash + fair market value + mortgage)

    Amount realized = (120000 + 780000 + 192000)

    Amount realized = 1092000

    so from equation 1

    Realized gain = Amount realized - Adjusted basis

    Realized gain = 1092000 - 760000

    Realized gain = $332000

    so we can say that

    Realized gain of Shontelle = $332000
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