Question

Dorothea orginally sold her home for $92,000. At that time, her adjusted basis in the home was $95,000. Five years later, she repossessed the home when the balance of the note was $87,000. She resold it within one year for $100,000. Original sale expenses were $1,150 and reslae expenses were $1,350. Repossession costs were $2,900. She incurred $1,100 for improvements prior to the resale. What is Dorothea's recomputed gain?

Answer 1

$3,500

Step-by-step explanation:

The computation of Dorothea's recomputed gain is shown below:-

Particulars Amount

Initial Sale price $92,000

Less: Adjusted Cost of Home ($95,000)

Less: Original Sale Expenses ($1,150)

Loss from 1st-time sale $4,150

Resold sale price $100,000

Less: Repossessed Cost ($87,000)

Less: Improvements Costs prior to

Resale ($1,100)

Less: Repossession Costs ($2,900)

Less: Resale Expenses ($1,350)

Gain from Resale of Home $7,650

Less: Loss from 1st-time sale ($4,150)

Gain from Resale of Home $3,500