Question: Evergreen Inc. sells a parcel of commercial land and an office building with an adjusted tax basis of $120,000 and $60,000, respectively, for a total price of $700,000. The original purchase price Evergreen Inc. allocated to the building was $800,000. Evergreen Inc. has deducted $600,000 in depreciation expense. Evergreen Inc.'s realized gain on this transaction is $520,000. If Evergreen Inc. takes back a note as part of the proceeds, what is Evergreen Inc.'s gross profit percentage? Options: A. 80% B. 75% C. 65% D. 60% E. 50%
Question: Evergreen Inc. sells a parcel of commercial land and an office building with an adjusted tax basis of $120,000 and $60,000, respectively, for a total price of $700,000. The original purchase price Evergreen Inc. allocated to the building was $800,000. Evergreen Inc. has deducted $600,000 in depreciation expense. Evergreen Inc.'s realized gain on this transaction is $520,000. If Evergreen Inc. takes back a note as part of the proceeds, what is Evergreen Inc.'s gross profit percentage? Options: A. 80% B. 75% C. 65% D. 60% E. 50%
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 44P
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Transcribed Image Text:Question:
Evergreen Inc. sells a parcel of commercial land and an office building with an adjusted tax basis of
$120,000 and $60,000, respectively, for a total price of $700,000. The original purchase price
Evergreen Inc. allocated to the building was $800,000. Evergreen Inc. has deducted $600,000 in
depreciation expense. Evergreen Inc.'s realized gain on this transaction is $520,000.
If Evergreen Inc. takes back a note as part of the proceeds, what is Evergreen Inc.'s gross profit
percentage?
Options:
A. 80%
B. 75%
C. 65%
D. 60%
E. 50%
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