Answer:
Greg’s capital gain on the apartment = $590,000
Explanation:
Purchase Cost = $100,000
Improvements = $300,000
Total Initial cost = Purchase Cost + Improvements
Total Initial cost = $100,000 + $300,000
Total Initial cost = $400,000
Depreciation for 20 Years = Depreciation per annum * 20
= $2,500 * 20
= $50,000
Net Book value after 20 Years = Initial cost - Depreciation for 20 Years
= $400,000 - $50,000
= $350,000
Capital Gain = Net Sale - Net Book Value
When Net Sale = Sale Price - Commission
= $1,000,000 - $ 60,000
= $940,000
Hence, Capital Gain = Net Sale - Net Book Value
Capital Gain = $940,000 - $350,000
Capital Gain = $590,000
