Bernadette sold her home. She received cash of $40,000, the buyer assumed her mortgage of $180,000, and she paid closing costs of $2,300 and a broker’s commission of $7,000. What is the amount realized on the sale? If she has a basis in the home of $138,000, what is her realized gain or loss on the sale? What is the character of the recognized gain or loss? How would your answer to (c) change if Bernadette sold a building used by her sole proprietorship rather than her personal residence?
Bernadette sold her home. She received cash of $40,000, the buyer assumed her mortgage of $180,000, and she paid closing costs of $2,300 and a broker’s commission of $7,000. What is the amount realized on the sale? If she has a basis in the home of $138,000, what is her realized gain or loss on the sale? What is the character of the recognized gain or loss? How would your answer to (c) change if Bernadette sold a building used by her sole proprietorship rather than her personal residence?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Bernadette sold her home. She received cash of $40,000, the buyer assumed her mortgage of $180,000, and she paid closing costs of $2,300 and a broker’s commission of $7,000.
- What is the amount realized on the sale?
- If she has a basis in the home of $138,000, what is her realized gain or loss on the sale?
- What is the character of the recognized gain or loss?
- How would your answer to (c) change if Bernadette sold a building used by her sole proprietorship rather than her personal residence?
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