Problem 8-15 (Algorithmic)
Sale of a Personal Residence (LO 8.12)
Larry Gaines, age 42, sells his personal residence on November 12, 2017, for $178,800. He lived in the house for 7 years. The expenses of the sale are $12,516, and he has made capital improvements of $5,364. Larry's cost basis in his residence is $103,704. On November 30, 2017, Larry purchases and occupies a new residence at a cost of $223,500.
Calculate Larry's realized gain, recognized gain, and the adjusted basis of his new residence.
If an amount is zero, enter "0".
a) Realized gain = 178,800
Less: Adjusted basis
Sale expenses = 12,516
Capital improvements = 5,364
Cost basis = 103,704 121,584
Realized gain $ 57,216
b) Recognized gain
Recognized gain would be "0" because he will get the benefit upto $250,000 from sale of his residence.
c) Adjusted basis of New residence
Adjusted basis of new residence is the cost price which is $223,500.
a) Realized gain = $57,216
b) Recognized gain = 0
c) Adjusted basis of New residence = $223,500
Get Answers For Free
Most questions answered within 1 hours.