Question

To calculate the amount realized on the sale of an asset, the proceeds are reduced by which of the following?

A. Tax basis of the property
B. Selling expenses
C. Gain realized
D. Both, tax basis of the property and selling expenses
E. All of the choices are correct

Answer 1

To calculate the amount realized, subtract both the tax basis of the property and the selling expenses from the proceeds. Gain realized is not subtracted but is the result of these calculations.

Step-by-step explanation:

To calculate the amount realized on the sale of an asset, the proceeds are reduced by the tax basis of the property and the selling expenses.

Therefore, the correct answer to the question is D. Both, tax basis of the property and selling expenses. The gain realized is not reduced from the proceeds to calculate the amount realized; instead, the gain realized is the result of subtracting the adjusted basis of the asset from the amount realized.