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Individual A purchased an apartment building for $200,000 in cash, and also assumed an existing mortgage of $800,000. A paid $15,000 to obtain title insurance,

Individual A purchased an apartment building for $200,000 in cash, and also assumed an existing mortgage of $800,000. A paid $15,000 to obtain title insurance, and he paid legal fees of $5,000. He kept the building for 3 years, then sold it. Each year he owned it, A took a depreciation deduction, where the depreciation amount is computed based upon a straight-line, 30 year life. Immediately before A sold it, he replaced the roof, for a cost of $50,000, and repaired broken windows for $3,000. He then sold the building for cash of $300,000, and the buyer assumed his mortgage of $700,000. A split a total real estate broker fee of $20,000, equally with the buyer. 



What was A's taxable gain or loss?

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To calculate As taxable gain or loss we need to determine the adjusted basis of the property and subtract it from the selling price Initial Basis As i... blur-text-image

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