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Simple English definitions for legal terms
amount realized
Read a random definition: damages for detention
A quick definition of amount realized:
Amount realized: The amount of money or other things a person gets when they sell or exchange something they own. This can include cash, property, services, or debts that the buyer takes on. It's important for taxes because it helps determine if the person made a profit (gain) or a loss on the sale or exchange.
A more thorough explanation:
Definition: The amount received by a taxpayer for selling or exchanging an asset, which can include cash, property, services received, or debts assumed by a buyer. This is different from gain or loss.
Example 1: If you sell your car for $10,000, the amount realized is $10,000.
Example 2: If you exchange your car for a new one and receive $5,000 in addition to the new car, the amount realized is the value of the new car plus the $5,000.
Explanation: Amount realized is the total amount received by the taxpayer for selling or exchanging an asset. It includes all forms of payment, such as cash, property, services, or debts assumed by the buyer. This is important for tax purposes because it determines the taxpayer's gain or loss on the sale or exchange of the asset.