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Constanza, who is single, sells her current personal residence (adjusted basis of $213,000) for $596,400. She...

Constanza, who is single, sells her current personal residence (adjusted basis of $213,000) for $596,400. She has owned and lived in the house for 30 years. Her selling expenses are $29,820.

Constanza's realized gain is $ and her recognized gain would be $.

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Answer #1

Realized gain = Net sale proceeds - Adjusted basis

Net sale proceeds = sale value - selling expenses

Net sale proceeds =$596400 - $29280

= $567120

Realized gain = $567120 - $213000

= $354120

Recognized gain =

Realized gain - Exclusion from capital gain (Note)

= $354120 - $250000

= $104120

Note - Section 121 of the Internal Revenue Code allows the exclusion of the realized capital gain of up to $250000 from capital gain if it is the sale of the taxpayer's personal residence.

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