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Malik sold his ranch during the current taxable year. The ranch cost Malik $850,000, which included the land and several buildings used in the ranching
Malik sold his ranch during the current taxable year. The ranch cost Malik $850,000, which included the land and several buildings used in the ranching operations. Over the years Malik spent an additional $189,000 on capital improvements. At the date of the sale, accumulated depreciation was $579,000. Additionally, the ranch was encumbered by a mortgage of $200,000 at the date of sale. The buyer paid him $500,000 in cash, agreed to take the title subject to the $200,000 mortgage, and agreed to pay him $100,000 with interest at 3.5 percent one year from the date of sale. Fill in the blanks below
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