This year, John purchased property from William by assuming an existing mortgage of $40,000 and agreed to pay an additional $60,000, plus interest, in the 3 years following the year of sale (i.e. $20,000 annual payments for three years, plus interest). William had an adjusted basis of $44,000 in the building. What are the sales price and the contract price in this transaction?

Question

Quizplus · Accepted Answer

The selling price is $40,000 mortgage assumed + $60,000 future annual payments = $100,000. The contract price is the $60,000 in future payments.

This Year, John Purchased Property from William by Assuming an Existing