Sam traded a parcel of land for a tractor and a car. He had purchased the land five years earlier for $16,000. The market value

Question

2 years ago

14

of the car and tractor is $20,000. What is the amount of gross income resulting from this transaction?

1 answer:

mina [271] · Answer 1 · 2022-06-04T07:28:15+03:00

Answer:

$4,000

Explanation:

Sam's gross income from this transaction can be calculated by subtracting the price of the car and the tractor from the cost basis of the land.

Sam's gross income = cost basis of land - price of car and tractor = $20,000 - $16,000 = $4,000

In this case Sam's gain should be considered capital gains since it is a gain made from the selling investments that are held for more than 1 year.