Pierre sold a parcel of land for $50,000.He received $10,000 this year and signs a contract to receive four additional payments of $10,000 each plus interest.If Pierre had a basis in the land of $10,000 and incurred $2,500 in selling expenses,what is his gross profit percentage?

Question

Quizplus · Accepted Answer

The gross profit is calculated as the selling price minus the basis and selling expenses. Here, the selling price is $50,000, the basis is $10,000, and the selling expenses are $2,500. Thus, the gross profit is $50,000 - $10,000 - $2,500 = $37,500. The gross profit percentage is the gross profit divided by the selling price, which is $37,500 / $50,000 = 0.75, or 75%.

Pierre Sold a Parcel of Land for $50,000