In the current yearMr. D sold a parcel of land (acquired and held for investment), which had an adjusted basis to him of $25,000 for $37,500 cash and artwork with a fair market value of $12,500. The buyer also assumed $10,000 mortgage on the land. D paid $2,500 in selling expenses. What is the amount of Mr. D's gain on the sale?

Question

Cedric

Business

13 May, 23:59

In the current yearMr. D sold a parcel of land (acquired and held for investment), which had an adjusted basis to him of $25,000 for $37,500 cash and artwork with a fair market value of $12,500. The buyer also assumed $10,000 mortgage on the land. D paid $2,500 in selling expenses. What is the amount of Mr. D's gain on the sale?

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Oz · Answer 1

The amount of Mr. D's gain on the sale 22,000 dollars.

Explanation:

The gain on sale is calculated by subtacting, the sum of book value/cost of asset and cost of diposal from consideratiion received. In case consideration received is in kind than fair value of benifit traded is taken as consideration.

Cash Received = 37,000

Art work FV = 12,500

Selling expenses = (2,500)

Cost of land = (25,000)

Profit/Gain = 22,000