This Year, John Purchased Property from William by Assuming an Existing

question 25

Multiple Choice

This year, John purchased property from William by assuming an existing mortgage of $40,000 and agreed to pay an additional $60,000, plus interest, in the 3 years following the year of sale (i.e. $20,000 annual payments for three years, plus interest) . William had an adjusted basis of $44,000 in the building. What are the sales price and the contract price in this transaction?

• A) \[\begin{array} { | l | l | }
• \hline \text { Sales Price } & \text { Contract Price } \\
• \hline \$ 40,000 & \$ 60,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Sales Price } & \text { Contract Price } \\
• \hline \$ 100,000 & \$ 40,000
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Sales Price } & \text { Contract Price } \\
• \hline \$ 100,000 & \$ 60,000
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Sales Price } & \text { Contract Price } \\
• \hline \$ 100,000 & \$ 100,000
• \end{array}\]

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Definitions:

Abusive Practices

Actions, especially by those in positions of power, that are harmful, unethical, or exploitative.

Lemon Laws

State laws that protect consumers from the burden of vehicles that repeatedly fail to meet standards of quality and performance.

Magnuson-Moss Act

A federal law aimed at protecting consumers from deceptive warranty practices.

Industry-Wide Safety Standards

Norms and regulations designed to ensure safe practices across an entire industry, often developed by consensus among industry members or mandated by governmental agencies.