Mason received $20,000 cash and equipment worth $10,000 in exchange for land that was encumbered by an $80,000 mortgage that the buyer assumed.Mason's basis for the land is $90,000.What is Mason's realized gain or loss on the sale?
A)$20,000 realized gain
B)$10,000 realized gain
C)$10,000 realized loss
D)no realized gain or loss

Question

Quizplus · Accepted Answer

Mason's realized gain is calculated as follows: Amount realized ($20,000 cash + $10,000 equipment + $80,000 mortgage assumed by buyer = $110,000) minus Mason's basis for the land ($90,000) equals a $20,000 realized gain.

Mason Received $20,000 Cash and Equipment Worth $10,000 in Exchange