Sol purchased land as an investment on January 12, 2005 for $85,000. On January 31, 2014, Sol sold the land for $20,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?

Question

Quizplus · Accepted Answer

The realized gain or loss is calculated as the amount received from the sale minus the original purchase price. Sol received $20,000 in cash and the purchaser assumed a $70,000 mortgage, totaling $90,000. The original purchase price was $85,000. Therefore, the realized gain is $90,000 - $85,000 = $5,000.

Sol Purchased Land as an Investment on January 12, 2005