Liliana sells her home (where he had lived for the past 10 years) for $100,000 o
ID: 2593532 • Letter: L
Question
Liliana sells her home (where he had lived for the past 10 years) for $100,000 on October 31. The real estate agent’s commission is 5 percent of the sales price. On July 15 she pays $2,000 for painting and ordinary repairs. She pays $1,000 more on September 30 for additional fix-up repairs. The adjusted basis of his old home is $50,000. On July 30 she buys a new home for $80,000.
The realized gain on the sale of his home is the following:
$50,000
$45,000
$43,000
$42,000
The adjusted basis of Liliana’s new home is what amount?
$80,000
$30,500
$44,500
$49,500
Liliana may exclude gain of the following amount?
$42,000
$45,000
$50,000
$250,000
Explanation / Answer
a. Realized gain on sale of old home = Sale value - commission - Adjusted basis of old home - cost on improvements
= $100,000 - (100,000*5%) - 50,000 - 2,000-1,000
Gain on sale of old home = $42,000
b. Adjusted basis of new home = purchase price = $80,000
c. Liliana can exclude gain of = $42,000
Explanation:
As per the exclusion on sale of main home, an individual an exclude up to $250,000 in the profit from the sale of their main home.
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