Explore BrainMass

Explore BrainMass

    The Amount Realized and Gain on Sale of Residence

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Elvin, 45 years of age, sells his residence in 2008. He recieves $30,000 in cash and the buyer assumes his $105,000 mortgage. Elvin also pays $6,500 in commissions and transfer costs.

    a. Calculate the amount realized on the sale. $____________________

    b. If the residence was acquired in 1986, and its adjusted basis is $75,000, calculate the amount andnature of the taxable gain on the sale (assuming he does not purchase a new residence).


    © BrainMass Inc. brainmass.com June 3, 2020, 10:51 pm ad1c9bdddf

    Solution Preview

    a. The amount realized is the selling price less the selling expenses. The selling price includes the $30,000 in cash and the $105,000 mortgage assumed by the buyer; ...

    Solution Summary

    This solution illustrates the computation of the amount realized and amount of gain on the sale of a residence.