Olessa, single and age 60, sells her home for $540,000 after living there for 20 years. Her adjusted basis in that home was $220,000 and she has an additional $10,000 of selling expenses. What is the maximum gain that Olessa must report in connection with the sale of her principal residence?

Net gain = $60,000

Explanation:

Given:

Sale value of house = $540,000

Adjusted value = $220,000

Selling expenses = $10,000

Computation of gross profit on the house:

Gross profit on sale = Sale value of house - Adjusted value - Selling expenses

Gross profit on sale = $540,000 - $220,000 - $10,000

Gross profit on sale = $310,000

Maximum limit on gain from sale of house = $250,000(Form number 1040, Schedule D)

Computation of net gain:

Net gain = $310,000 - $250,000

Net gain = $60,000

All commercial banks must keep an account with the Central Bank. These balances are used for cheque clearing purposes between banks.  Payments for cheques between banks are set off at the Central Bank’s clearing house. The Central Bank can also demand commercial banks to deposit a certain percentage of their total deposits with the central bank in order to control the money supply.

The Central Bank is a lender of last resort and will aid commercial banks when needed. The Central Bank dictates the interest rate that commercial banks can offer by setting the bank rate. This is the interest rate set by the Central Bank and the rate at which commercial banks and the Central Bank do business, e.g. loans offered by the Central Bank to commercial bank.