Paul Panda purchased property from Walter Wolf by assuming an existing mortgage of $12,000 and agreeing to pay an additional $6,000, plus interest, over the next three years. Walter Wolf had an adjusted basis of $8,800 in the building and paid selling expenses totaling $1,200. What were the sales price and the contract price in this transaction?

Question

Quizplus · Accepted Answer

Sales price = $12,000 + $6,000 = $18,000. Contract price = $6,000 (cash to be received) + $2,000 (excess of assumed mortgage ($12,000) over adjusted basis plus expenses to sell ($8,800 + $1,200 = $10,000)).

Paul Panda Purchased Property from Walter Wolf by Assuming an Existing