Robert sold his ranch which was his principal residence during the current taxable year. At the date of the sale, the ranch had an adjusted basis of $460,000 and was encumbered by a mortgage of $200,000. The buyer paid him $500,000 in cash, agreed to take the title subject to the $200,000 mortgage, and agreed to pay him $100,000 with interest at 6 percent one year from the date of sale.
The recognized gain, if Robert is married filing a joint return and he and his wife owned and used the ranch as their principal personal residence
| a. |
$40,000 |
|
| b. |
$240,000 |
|
| c. |
$340,000 |
|
| d. |
$0 |
|
| e. |
None of the above. |
If a new residence is purchased for 500000, the basis of the new residence for at least 2 years is
| a. |
$500,000 |
|
| b. |
$800,000 |
|
| c. |
$460,000 |
|
| d. |
$0 |
|
| e. |
None of the above |
Robert’s realized gain on the sale:- Option C- $340000
| Amount Realized: | |
| Cash | $ 500,000 |
| Mortgage (property taken subject to) | 200,000 |
| Note receivable | 100,000 |
| $ 800,000 | |
| Adjusted basis | (460,000) |
| Realized and recognized gain | $ 340,000 |
Robert sold his ranch which was his principal residence during the current taxable year. At the...
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