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How much increase in net worth (equity) would a market basis balance sheet show over a cost basis if Land was purchased for $1,000,000, is currently valued at $5,500,000 and capital gains taxes are 10%
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14 votes
14 votes
How much increase in net worth (equity) would a market basis balance sheet show over a cost basis if Land was purchased for $1,000,000, is currently valued at $5,500,000 and capital gains taxes are 10%

User Bondan Sebastian
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1 Answer

29 votes
29 votes

Answer: $4,050,000

Step-by-step explanation:

Increase in net worth shows the after tax gain that the person got after the land in question increased in value.

= (Current value - Purchase price) * ( 1 - tax rate)

= (5,500,000 - 1,000,000) * (1 - 10%)

= 4,500,000 * 0.90

= $4,050,000

User Mykisscool
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2.9k points
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