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'Profit' and 'Equity'

July 29, 1990

Profit (in this instance) as any schoolchild could tell Campbell, is the sales price less the selling expenses and the cost price (including any costs of improvement). Period.

Shame on the L.A. Times for publishing this simple writer's theory as if touted by an expert.

CLIVE KENNEDY

Beverly Hills

Don Campbell replies:

When in his question my letter writer used the word "profit" when he clearly meant "equity," my first instinct was to change the copy accordingly. The second instinct was to let it stand, but insert a reminder that the two words are not synonymous. The moral here is: Go with your first instincts.

Despite the fact that I subsequently bracketed "profit" in quotes as a reminder to myself that is was the reader's word, not mine, and that this was where the clarification should be inserted, it somehow wasn't done. It didn't blunt the validity of the point being made: That a relatively modest acceleration of principal payments over a five-year period can have a dramatic impact on the amount of cash equity available for the down payment on a replacement home of equal or greater value than the one being sold--and on which there is therefore no tax consequence. But it's true that in my desire to make this point, the distinction between "profit" and "equity" got lost in the shuffle.

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