CH13-HW11
pdf
keyboard_arrow_up
School
Baruch College, CUNY *
*We aren’t endorsed by this school
Course
9863
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
Pages
1
Uploaded by CountTapir2589
11/28/23, 2
:
04 PM
Page 1 of 1
https://cxp.cengage.com/activityservice/run/html5/handler.jsp
?
id=b…A%2F%2Fv2.cengagenow.com&xdm_c=activityService_cxpContent&xdm_p=1
Exercise 13-41 (Algorithmic) (LO. 8, 9)
Constanza, who is single, sells her current personal residence (adjusted basis of $186,000) for $520,800. She has owned and lived in the
house for 30 years. Her selling expenses are $26,040.
What is Constanza's realized and recognized gain?
Constanza's realized gain is $
✔
308,760
and her recognized gain would be $
✔
58,760
.
Feedback
Check My Work
If certain conditions are met, § 121 exclusion on the sale of a principal residence is available to taxpayers. The realized gain must first be
determined.
Post-Submission
Answers: $308,760; $58,760.
The amount of the available § 121 exclusion on the sale of a principal residence is $250,000. If the realized gain does not exceed
$250,000, there is no recognized gain. Realized gain is calculated in the normal manner.
The amount realized is the selling price less the selling expenses, which include items such as the cost of advertising the property for sale,
real estate broker commissions, legal fees in connection with the sale, and loan placement fees paid by the taxpayer as a condition of
arranging financing for the buyer. Repairs and maintenance performed by the seller to aid in selling the property are treated neither as
selling expenses nor as adjustments to the taxpayer's adjusted basis for the residence.
Amount realized ($520,800 - $26,040)
$494,760
Less: Adjusted basis
(186,000)
Equals: Realized gain
$308,760
Less: § 121 exclusion
(250,000)
Equals: Recognized gain
$58,760
Solution
Exercise 13-41 (Algorithmic) (LO. 8, 9)
Constanza, who is single, sells her current personal residence (adjusted basis of $186,000) for $520,800. She has owned and lived in the
house for 30 years. Her selling expenses are $26,040.
What is Constanza's realized and recognized gain?
Constanza's realized gain is $
308760
and her recognized gain would be $
58760
.
Discover more documents: Sign up today!
Unlock a world of knowledge! Explore tailored content for a richer learning experience. Here's what you'll get:
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help