Gloria Gates sold the building in which she operated her business. Gloria had acquired the property many years ago for $150,000 and over this period had made major improvements costing $180,000. Gloria had claimed $60,000 in straight-line depreciation at the time of the sale. fte selling expenses paid by Gloria amounted to
$40,000. Bill purchased the property by (1) giving Gloria $170,000 in cash; (2) giving Gloria unlike property with a fair market value of $180,000; (3) assuming Gloria's mortgage on the property of $140,000; and (4) paying a delinquent real estate tax bill on the property of $50,000. What is Gloria's gain on the sale?

Question

Quizplus · Accepted Answer

$230,000. the amount realized is $500,000 ($170,000 + $180,000 +$140,000 +$50,000 - $40,000) and the adjusted basis is $270,000 ($150,000 +$180,000 - $60,000) so the gain is $230,000.

Gloria Gates Sold the Building in Which She Operated Her