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