Direct answer
What does Amount realized mean?
The total value received on a disposition, adjusted for selling expenses and other items as tax law provides.
Exam cue: Use amount realized, not just contract price, when calculating taxable gain or loss.
What does it look like in a question?
New York example
A seller starts with cash and other value received and accounts for qualifying selling expenses.
Common exam trap
What should you not confuse it with?
Amount realized is not the same as the check the seller takes home after paying a mortgage.
Related income tax terms
Adjusted basisOriginal basis increased or decreased by tax-law adjustments such as qualifying improvements and allowed depreciation.BasisA tax measurement used to determine gain, loss, depreciation and other tax consequences for property.Capital gainGain from the sale or exchange of a capital asset, calculated under tax law and subject to classification and exclusions.Depreciation recaptureTax treatment that can recharacterize or specially tax part of gain tied to prior depreciation deductions.Like-kind exchangeA tax-deferred exchange under Internal Revenue Code section 1031 for qualifying real property held for investment or productive use in a trade or business.Principal residenceA person's main home for tax purposes, determined from use and the applicable facts and rules.
Sources used2 references with section locators
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