Sol purchased land as an investment on January 12,2004 for $85,000.On January 31,2013,Sol sold the land for $20,000 cash.In addition,the purchaser assumed the mortgage of $70,000 on the land.What is the amount of the realized gain or loss on the sale?

Question

Quizplus · Accepted Answer

The realized gain or loss is calculated as the difference between the amount realized from the sale and the original purchase price. The amount realized is the cash received ($20,000) plus the mortgage assumed by the purchaser ($70,000), totaling $90,000. The original purchase price was $85,000. Therefore, the realized gain is $90,000 - $85,000 = $5,000.

Sol Purchased Land as an Investment on January 12,2004 for $85,000.On