Real Estate Math
A Montana seller is in the 20% long-term capital gains tax bracket. They sell an investment property for $480,000 with an adjusted basis of $280,000. What is their federal capital gains tax (excluding state taxes and depreciation recapture)?
A$40,000✓ Correct
B$56,000
C$96,000
D$20,000
Explanation
Capital gain = $480,000 - $280,000 = $200,000. Tax = $200,000 x 0.20 = $40,000. To solve this, multiply the relevant values: $480,000 and $280,000 at 20%.. The correct answer is $40,000.. This is a common calculation on the Montana real estate exam.
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