Calculate Larry's realized gain, recognized gain, and the adjusted basis of his new residence. If an amount is zero, enter "0". a. Realized gain b. Recognized gain c. Adjusted basis of new residence X X
Calculate Larry's realized gain, recognized gain, and the adjusted basis of his new residence. If an amount is zero, enter "0". a. Realized gain b. Recognized gain c. Adjusted basis of new residence X X
Chapter15: Property Transactions: Nontaxable Exchanges
Section: Chapter Questions
Problem 49P
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Transcribed Image Text:Sale of a Personal Residence (LO 4.6)
Larry Gaines, a single taxpayer, age 42, sells his personal residence on November 12, 2022, for $151,600. He lived in the house for 7 years. The expenses of the sale
are $10,612, and he has made capital improvements of $4,548. Larry's cost basis in his residence is $87,928. On November 30, 2022, Larry purchases and occupies a
new residence at a cost of $189,500.
Calculate Larry's realized gain, recognized gain, and the adjusted basis of his new residence.
If an amount is zero, enter "0".
a. Realized gain
b. Recognized gain
c. Adjusted basis of new residence
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For gains on the sale of a personal residence after May 6, 1997, a seller of any age who has owned and used a home as a principal residence for at least
2 of the last 5 years before the sale can exclude from income up to a statutory amount of gain (depending on filing status). In general, this personal
residence exclusion can be used only once every 2 years. As under prior law, a personal residence includes single-family homes, mobile homes,
houseboats, condominiums, cooperative apartments, duplexes, or row houses.
The taxpayer's overall gain or loss is calculated using the following formula: Amount realized Adjusted basis Gain or loss realized. The adjusted basis
of property is equal to the original basis plus and minus certain adjustments..
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