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

Answer:

$3,500

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