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Ruth sold land she purchased three months earlier for use in her business. Her cost and...

Ruth sold land she purchased three months earlier for use in her business. Her cost and adjusted basis in the land is $75,000. She incurred $5000 in expenses related to the sale. The buyer paid $80,000 cash and assumed Ruth $25,000 mortgage on the property. What is the amount of her gain, and Ware on form 4797 will she report the sale?
a. $25,000, part I
b. $25,000, part II
c. $30,000, part III
d. $30,000, part IV
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Answer #1
The land is used in business and is held for less than one year
hence it’s a short term capital gain which is shown in Part 11 of form 4797
Short term gain is 25000
(80000+25000)-(75000+5000)
Option B $25000 Part 11 is correct option
If any doubt please comment
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