Alice owns land with an adjusted basis of $610,000, subject to a mortgage of $350,000.Real estate taxes are $9,000 per calendar year and are payable on December 31.On April 1, 2012, Alice sells her land subject to the mortgage for $650,000 in cash, a note for $600,000, and property with a fair market value of $120,000.What is the amount realized?
A)$1,370,000.
B)$1,372,219.
C)$1,720,000.
D)$1,722,219.
E)None of the above.

Question

Quizplus · Accepted Answer

The amount realized is the sum of cash received, the fair market value of the other property received, and the amount of any mortgage or other debts on the property assumed by the buyer.

Cash received: $650,000
Fair market value of property received: $120,000
Note received: $600,000

Total amount realized: 
$650,000 + $120,000 + $600,000 = $1,370,000

However, the mortgage of $350,000 must be subtracted from the amount realized: 
$1,370,000 - $350,000 = $1,020,000

Therefore, the correct answer is D.

Alice Owns Land with an Adjusted Basis of $610,000, Subject