On July 1, 2012, Ted, age 73 and single, sells his personal residence of the las

Question

On July 1, 2012, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000. Ted's basis in his residence is $35,000. The expenses associated with the sale of his home total $20,000. On December 15, 2012, Ted purchases and occupies a new residence at a cost of $175,000. Calculate Ted's realized gain, recognized gain, and the adjusted basis of his new residence.

a.        Realized gain $__________     

b.        Recognized gain $__________     

c.        Adjusted basis of new residence $__________

Explanation / Answer

Hi,

Please find the answer as follows:

Realized Gain = 365000 - 35000 - 20000 = 310000

Recognized Gain = 310000 - 250000 (exclusion upto 250000) = 60000

Adjsuted Basis of New Residence = 175000

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.