Charles asks…How do you calculate a gain?Charles owns a farm that he purchased for investment purposes several years ago. The purchase price was $36,000.00. Now he is interested in getting a condominium at the beach which he will rent out most of the time.
(a) If he sells the farm outright for $55,000.00 cash, how much gain will he recognize?
(b) If he sells the farm for $55,000.00 cash, and thereafter purchases a condominium, how much gain will he recognize? Why?
(c) If he trades the farm for a condominium worth $55,000.00 that cost
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