Question

when calculating the net investment income tax the following income items are included in net investment income except

Dorothea originally sold her home for $92,000 at that time, her adjusted basis in the home was $95,000. five years later, she repossessed the home when the Balance of the note was $87,000. she resold it within one year for $100,000. original sale expenses were $1,150 and resale expenses were $1,350. repossession costs were $2,900. she incurred $1,100 for improvements prior to the resale . what is Dorothea's recomputed gain?

Answer 1

Answer: Recomputed Gain = $3,500

Calculations:

Original sale price	$ 92,000
(Less): Adjusted cost home	($ 95,000)
(Less): Original sale expense	($ 1,150)
Loss form first time sale	($ 4,150)

Resold sale price	$ 100,000
(Less): Repossessed Cost	($ 87,000)
(Less): Improvements Costs prior to Resale	($ 1,100)
(Less): Repossession Costs	($ 2,900)
(Less): Resale Expenses	($ 1,350)
Gain from Resale of Home	$ 7,650
(Less): Loss from 1st-time sale	($ 4,150)
Gain from Resale of Home	$ 3,500