The following case occurred in actual practice, and is given here because it illustrates an apparent divergence from the rules suggested.

John Doe owned a house which cost him $8,000, and on which there was a mortgage of $4,500, thus leaving him an equity of $3,500. He sold the house to Richard Roe for $9,000, of which $3,000 was payable in cash. The existing first mortgage of $4,500 was assumed, and a second mortgage for $1,500, payable in one year, was accepted by Doe. In this case, it is not the total price of $9,000 which would form a basis for calculation, but rather the price obtained for the equity of John Doe, viz., $4,500. Of this equity, $3,000 being paid in cash, two-thirds of the profit of $1,000 would be realized immediately, and the remaining one-third would be realized upon the payment of the second mortgage of $1,500.