Question

Douglas owns rental property that he bought several years ago for $250,000. He has taken depreciation on the house in the amount of $35,000 since buying it. He sells it in 2020 for $290,000. His selling expenses are $12,000 for the year. What was Bob's realized gain on the sale?

a. $77,000.
b. $63,000.
c. $18,000.
d. $53,000.

Answer 1

Gain= $63,000

Step-by-step explanation:

First, we need to calculate the book value:

Book value= purchase price - accumulated depreciation

Book value= 250,000 - 35,000

Book value= 215,000

Now, the gain or loss from the sale:

Gain/loss= selling price - book value - selling expense

Gain/loss= 290,000 - 215,000 - 12,000

Gain= $63,000