Question

brian brewster sold property to a buyer who paid him $400,000 cash and assumed an existing mortgage of $150,000. the property had cost $250,000 and he had made improvements of $50,000. depreciation of $100,000 has been claimed and selling expenses were $20,000. what is the amount of realized gain?

Answer 1

$330,000

Step-by-step explanation:

To calculate the amount of realized gain, we need to subtract the adjusted basis of the property from the total amount received from the sale.

Adjusted basis = Cost of property + Improvements - Depreciation

Adjusted basis = $250,000 + $50,000 - $100,000

Adjusted basis = $200,000

Total amount received from the sale = Cash received + Assumed mortgage

Total amount received from the sale = $400,000 + $150,000

Total amount received from the sale = $550,000

Realized gain = Total amount received - Adjusted basis - Selling expenses

Realized gain = $550,000 - $200,000 - $20,000

Realized gain = $330,000