In 2012, Leon Longrove sold a piece of business equipment that had an adjusted basis to him of $50,000 for $75,000 cash plus artwork that had a fair market value of $25,000. fte buyer assumed Leon's $20,000 loan on the equipment. Leon paid $5,000 in selling expenses. What is the amount of Leon's gain on the sale?

Question

Quizplus · Accepted Answer

the gain on Leon's sale is the amount realized reduced by the adjusted basis and the selling expenses. the amount realized is $120,000 ($75,000 cash plus the $25,000 of artwork received and the $20,000 loan assumed by the buyer). $120,000 less (the adjusted basis of $50,000 + the selling expenses of $5,000) = $65,000.

In 2012, Leon Longrove Sold a Piece of Business Equipment