Norm is negotiating the sale of a tract of his land to Pat. Use the following classification scheme to classify each of the items contained in the proposed sales contract:
____________Legend__________________
DARN = Decreases amount realized by Norm
IARN = Increases amount realized by Norm
DABN = Decreases adjusted basis to Norm
IABN = Increases adjusted basis to Norm
DABP = Decreases adjusted basis to Pat
IABP = Increases adjusted basis to Pat
a. Norm is to receive cash of $50,000.
b. Norm is to receive Pat's note payable for $25,000, payable in three years.
c. Pat assumes Norm's mortgage of $5,000 on the land.
d. Pat agrees to pay the realtor's sales commission of $8,000.
e. Pat agrees to pay the property taxes on the land for the entire year. If each party paid his or her respective share, Norm's share would be $1,000 and Pat's share would be $3,000.
f. Pat pays legal fees of $500.
g. Norm pays legal fees of $750.