3. A acquires a house for $400,000 and incurs $7,500 of various
closing fees. A also paid $3,000 of the sellers real estate taxes
which was part of the $400,000 purchase price. While A owned the
house A built a swimming pool for a cost of $32,000 but deducted
$15,000 as a medical expense, A deducted $9,000 of expenses as a
home office deduction of which $4,500 was for depreciation. A sells
his home to B on October 1, 2016. A receives $600,000 in cash and B
assumes A’s mortgage of $300,000. B will pay the entire year’s real
estate tax of $12,000 in addition to the $300,000 purchase price.
The broker’s commission on the sale is $30,000. B is obtaining
financing and to help B, A will pay points to the lender of
$10,000.What is A’s basis in the house, what is the amount realized
by A on the sale and what is A’s gain or loss with respect to the
house?