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CONCEPTS IN FED.TAX.,2020-W/ACCESS

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 21P

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MH Realty, LLC sells a parcel of waterfront land and a residential condo building with an
adjusted tax basis of $100,000 and 250,000, respectively for $500,000. The original purchase
price MH allocated to the building was $600,000. MH has deducted $350,000 in depreciation
expense. MH's realized gain is $150,000.
If MH takes back a note as part of the proceeds, what is MH's gross profit percentage?
A. 83.33%.
B. 71.43%.
C. 70.00%.
D. 50.00%.
E. 30.00%.

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