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I've calculated this problem, but would appreciate...




I've calculated this problem, but would appreciate a confirmation that I did it correctly. Matt King sells a rental house on January 1, 2012 and receives $130,000 cash and a note for $55,000 at 10% interest. The purchaser also assumes the mortgage on the property of $45,000. Matt?s adjusted basis in the house on the date of sale is $152,500 (no depreciation) and he collects only the $130,000 down payment in the year of sale. (a) Matt elects to recognize the total gain on the property in the year of sale, calculate the taxable gain: Cash $130,000 Add: buyer's note 55,000 Mortgage assumed by the purchaser 45,000 Selling price $230,000 Less: Matt's basis in the house (152,500) Total gain $77,500 Contract price (130,000 + 55,000) $185,000 Taxable gain = 77,500/185,000 x 130,000 $54,459


Paper#6507 | Written in 18-Jul-2015

Price : $25