Question

question content areathe bank forecloses on lisa's apartment complex. the property had been pledged as security on a nonrecourse mortgage whose principal amount at the date of foreclosure is $750,000. the adjusted basis of the property is $480,000, and the fair market value is $750,000. what is lisa's recognized gain or loss? a.($480,000) b.($750,000) c.$0 d.$270,000

Answer 1

$270,000 is lisa's recognized gain or loss if the property had been pledged as security on a nonrecourse mortgage.

Recognized gain = Amount realized - Adjusted basis.

750,000 - 480,000 = 270,000

When an asset is sold for more than it originally cost, it is said to have been a realized gain. Gains on an asset must be recognized in order to result in a capital gains scenario, but only if the asset is considered to be of a capital character. The difference between the selling price and the purchase price is the amount of any capital gain that must be recorded for income tax purposes.

Realizing profits on an asset simply indicates that a company, person, or investor made money when they sold a piece of real estate or an investment. The gain on the sale may or may not be taxable, depending on the type of asset and local tax regulations.

Learn more about recognized gain here

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