Problem:
Thios 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 three 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.
Required:
Question: What are the sale price and contract price in this transaction?
a. Sale price $40,000 Contract price $60,000
b. Sale Price $100,000 Contract Price $40,000
c. Sale Price $100,000 Contract Price $60,000
d. Sale Price $100,000 Contract Price $100,000
Note: Please provide through step by step calculations.