Francisco sells a parcel of land for $100,000 cash and the buyer also assumes Francisco's liability of $10,000.The basis of his land is $70,000.What is the gain or loss realized on the sale?

Question

Quizplus · Accepted Answer

The gain realized is calculated as the amount realized from the sale minus the basis of the property. The amount realized is the cash received plus the liability assumed by the buyer: $100,000 + $10,000 = $110,000. The basis is $70,000. Therefore, the gain is $110,000 - $70,000 = $40,000.

Francisco Sells a Parcel of Land for $100,000 Cash and the Buyer