Virginia, who is single, sells her principal residence (adjusted basis of $150,0

Question

Virginia, who is single, sells her principal residence (adjusted basis of $150,000) on January 5, 20x1 for $380,000. She has owned and occupied it as her principal residence for 20 years. She incurs a realtor's commission of $22,000 and legal fees of $5,000. On January 3, 20x1, Virginia purchases a townhouse for $300,000 and uses it as her principal residence. Because it is not near a convenience store, she sells the townhouse on December 20, 20x1 for $330,000. She incurs a realtor's commission of $18,000 and legal fees of $4,000. She buys a house on December 1, 20x1 for $250,000 and uses it as her principal residence. What is Virginia's recognized gain on the sale of each house and her adjusted basis for the house purchased on December 1, 20x1?

  $0; $0; $250,000
       $0; $8,000; $250,000
       $203,000; $0; $250,000
       $0; $8,000; $47,000
       None of the above

Explanation / Answer

Answer

$0; $8,000; $250,000

First house Second house Amount realized =380000-22000-5000=353000, 3,53,000 3,08,000 adjusted basis 1,50,000 300000 Realized gain 2,03,000 8,000 § 121 exclusion -203000 0 Recognized gain 0 8,000

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