Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's realized gain is:

Question

Quizplus · Accepted Answer

To calculate Sam's realized gain, we need to subtract his adjusted basis from the amount he sold the house for:
Adjusted basis = Original cost + Improvements
= $200,000 + $50,000
= $250,000
Realized gain = Amount sold for - Adjusted basis
= $260,000 - $250,000
= $10,000
Therefore, Sam's realized gain is $10,000. Choice C is the correct answer. To find the realized gain, we need to calculate the difference between the selling price and the adjusted basis. Adjusted basis is the original cost of the house plus any improvements made. Therefore, Sam's adjusted basis is $200,000 + $50,000 = $250,000. 
Realized gain = Selling price - Adjusted basis = $260,000 - $250,000 = $10,000. 
Therefore, the answer is C) $10,000.

Sam Bought a House for $200,000 $50,000 \$ 50,000 $50,000 B) $260,000 \$ 260,000 $260,000

Sam Bought a House for $200,000 $\$ 50,000$ B) $\$ 260,000$