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16 October, 20:36

In the current yearMr. D sold a parcel of land (acquired and held for investment), which had an adjusted basis to him of $25,000 for $37,500 cash and artwork with a fair market value of $12,500. The buyer also assumed $10,000 mortgage on the land. D paid $2,500 in selling expenses. What is the amount of Mr. D's gain on the sale?

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  1. 17 October, 00:35
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    The amount of Mr. D's gain on the sale 22,000 dollars.

    Explanation:

    The gain on sale is calculated by subtacting, the sum of book value/cost of asset and cost of diposal from consideratiion received. In case consideration received is in kind than fair value of benifit traded is taken as consideration.

    Cash Received = 37,000

    Art work FV = 12,500

    Selling expenses = (2,500)

    Cost of land = (25,000)

    Profit/Gain = 22,000
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