O&V sold an asset with a $78,300 adjusted tax basis for $100,000. The purchaser paid $30,000 in cash and assumed O&V's $70,000 mortgage on the asset. Compute O&V's net cash flow from the sale assuming a 21% tax rate.

Question

Quizplus · Accepted Answer

The net cash flow from the sale is $25,443. This is calculated as follows:Sale price: $100,000Less: Adjusted tax basis: $78,300Gain on sale: $21,700Less: Tax on gain (21% x $21,700): $4,557Net cash flow: $25,443

O&V Sold an Asset with a $78,300 Adjusted Tax Basis