What is the assumption amount for a farm with a market value of $80,000 and an FSA debt of $97,000 with unpaid real estate taxes of $5,000?

To determine the assumption amount for the farm, we need to consider the total liabilities and how they relate to the asset value. In this case, the assumption amount is typically calculated as the market value of the asset minus any existing liabilities that would transfer with that asset.

The market value of the farm is $80,000, which is an important figure that represents what the farm can be sold for in the market. The existing FSA debt is $97,000, which is a liability the buyer needs to consider. Additionally, there are unpaid real estate taxes amounting to $5,000 that must also be addressed.

In this scenario, the assumptions involve determining how much debt can realistically be assumed. Since the combined liabilities ($97,000 debt plus $5,000 in unpaid taxes) exceed the market value of the farm, the assumption amount will be limited to the market value of the farm itself.

Thus, when calculating the assumption amount, the market value ($80,000) serves as the cap on what can be reasonably assumed, as the borrower is unlikely to take on more debt than the value of the property being transferred. Consequently, the assumption amount is correctly identified as $75,000. This figure reflects the value of the entity