Bernadette sold her home. She received cash of $40,000, the buyer assumed her mortgage of $180,000, and she paid closing costs of $2,300 and a broker’s commission of $7,000.

a. What is the amount realized on the sale?

b. If she has a basis in the home of $138,000, what is her gain or loss on the sale?

c. What is the character of the gain or loss?

d. How would your answer to

(c) change if Bernadette sold a building used by her sole proprietorship rather than her personal residence?

AppendixLO1