Ask Question
31 December, 12:31

This year, Barney and Betty sold their home (sales price $750,000; cost $200,000). All closing costs were paid by the buyer. Barney and Betty owned and lived in their home for 18 months. Assuming no unusual or hardship circumstances apply, how much of the gain is included in gross income?

a. $550,000

b. $300,000

c. $250,000

d. $50,000

e. None

+4
Answers (2)
  1. 31 December, 12:57
    0
    The correct answer is option (a) $550,000

    Explanation:

    Given Data;

    Sales price = $750,000

    Cost price = $200,000

    The profit is calculated as;

    Profit = sales price - cost price

    = $750,000 - $200,000

    =$550,000

    Assuming no unusual or hardship circumstances apply, all the profit will be included in the gross income.

    Therefore, $550,000 is included in the gross income.
  2. 31 December, 14:43
    0
    a. 550,000

    Explanation:

    The gain on the asset is calculated by the sales proceeds minus the original cost of the asset.

    In this question the home' initial cost is $200,000 and it is sold on $750,000. In absence of any unusual or hardship circumstances, the direct gains is $550,000 ($750,000 - $200,000) as all the closing costs are paid by the buyer, so, Barney ans Betty should include the whole gain of $550,000 in the gross income.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “This year, Barney and Betty sold their home (sales price $750,000; cost $200,000). All closing costs were paid by the buyer. Barney and ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers