Steve Drake sells a rental house on January 1, 2019, and receives $100,000 cash and a note for $50,000 at 7 percent interest. The purchaser also assumes the mortgage on the property of $25,000. Steve's original cost for the house was $170,000 on January 1, 2011 and accumulated depreciation was $27,000 on the date of sale. He collects only the $100,000 down payment in the year of sale. If Steve elects to recognize the total gain on the property in the year of sale, calculate the taxable gain.

$32,000  

Explanation:

The computation of the taxable gain is shown below;

Taxable gain on sale = Amount Realized - Adjusted Basis

where,

Amount Realized = Cash Received + Note received + Mortgage assumed by Purchaser

= $100,000 +$50,000 + $25,000

= $175,000

And, the adjusted basis is

= Original cost - Accumulated Depreciation

= $170,000 - $27,000

= $143,000

So, the taxable gain on sale is

= $175,000 - $143,000

= $32,000            

The gain which is arise from purchasing the asset to the sale of the asset i.e difference in these amounts attract the taxable gain

the second one is 3mm

because i just took the test

explanation:

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