Amanda purchased a commercial building for her business in 2008. The purchase price was $70,000 and she made improvements that cost $20,000. She deducted depreciation expense of $10,000. In 2010, She sold the building for $100,000 cash plus property with a fair market value of $20,000. The buyer assumed Amanda's real estate taxes of $3,000 and a mortgage of $17,000 on the building. Selling expenses were $4,000. What is Amanda's gain on the sale?
Calculate the gain or loss on the sale property by subtracting the adjusted basis from the amount realized to get the gain or loss. The amount realized is the selling price minus selling expenses. Selling expenses include commissions, advertising fees, legal fees, and loan charges paid by the seller, such as loan placement fees or points. Adjusted basis of property is $80,000. ($70,000 + $20,000 - $10,000). The amount realized from sale is $136,000 ($100,000 + $20,000 + $3,000 + $17,000 - $4,000). Gain is $56,000 ($136,000 - $80,000).Correct Answer: B