Question

albert purchased a tract of land for $140,000 in 2020 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $200,000. highway engineers surveyed the property and indicated that he would probably get $180,000. the highway project was abandoned in 2023 and the value of the land fell to $100,000. what is the amount of loss albert can claim in 2023?

Answer 1

Albert's realizable loss in 2023 is $40,000, which is the difference between the purchase price of the land ($140,000) and its value after the cancellation of the highway project ($100,000).

Step-by-step explanation:

Albert purchased land for $140,000 in 2020, expecting its value to rise due to the construction of a highway. The potential valuation reached $180,000 after a survey by highway engineers. However, the highway project was canceled in 2023, which resulted in the land's value dropping to $100,000.

The amount of loss Albert can claim in 2023 is based on the difference between the purchase price and the current value of the land. Therefore, Albert's loss is calculated as $140,000 (purchase price) - $100,000 (value in 2023) = $40,000.