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 1,2010,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 for tax purposes is the sum of all cash received and the fair market value of any property received:

$650,000 (cash) + $600,000 (note) + $120,000 (property) = $1,370,000

Note that the mortgage is not included in the amount realized since it is assumed that the buyer will assume responsibility for the mortgage.

Alice Owns Land with an Adjusted Basis of $610,000,subject to a Mortgage