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maw [93]
3 years ago
12

Juan, not a dealer in real property, sold land that he owned. His adjusted basis in the land was $700,000 and it was encumbered

by a mortgage for $100,000. The terms of the sale required the buyer to pay Juan $200,000 on the date of the sale. The buyer assumed Juan's mortgage and gave him a note for $900,000 (plus interest at the Federal rate) due in the following year. What is the gross profit percentage?
Business
1 answer:
Zielflug [23.3K]3 years ago
6 0

Answer:

45.45%

Explanation:

The total selling price was $200,000 (paid on the date of the sale) + $900,000 (note received) = $1,100,000

Juan's cost of he land = $700,000 (basis) - $100,000 (mortgage) = $600,000

Juan's profit = $1,100,000 - $600,000

Juan's gross profit percentage = $500,000 / $1,100,000 = 45.45%

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