Sale of a Personal Residence (LO 8.12) Larry Gaines, age 42, sells his personal

Question

Sale of a Personal Residence (LO 8.12)

Larry Gaines, age 42, sells his personal residence on November 12, 2016, for $268,400. He lived in the house for 7 years. The expenses of the sale are $18,788, and he has made capital improvements of $8,052. Larry's cost basis in his residence is $155,672. On November 30, 2016, Larry purchases and occupies a new residence at a cost of $335,500.

Calculate Larry's realized gain, recognized gain, and the adjusted basis of his new residence.

If an amount is zero, enter "0".

Explanation / Answer

Realized Gain $268400-155672-18788-8052 $85,888 Recognized gain $0 Realized-maximum exclusion of $250000 85888-maximum exclusion of $250000 hence recognized gain is $0 Adjusted Basis` $335,500 (price of new property)

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