Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2021, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2021, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2021. The closing statement showed the following disbursements: Real estate agent's commission $21,780 Appraisal fee 600 Exterminator's certificate 300 Recording fees 800 Mortgage to First Bank 305,000 Cash to seller 34,520 Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2021, Wesley purchases another residence for $325,000. If an amount is zero, enter "0". a. Calculate Wesley's recognized gain on the sale. b. What is Wesley's adjusted basis for the new residence? c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence? Wesley's recognized gain is $ and his adjusted basis for the new residence is s

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2021, at a price of $390,000. He rejected several
offers in the $350,000 range during the summer. Finally, on August 16, 2021, he and the purchaser signed a contract to sell for $363,000.
The sale (i.e., closing) took place on September 7, 2021. The closing statement showed the following disbursements:
Real estate agent's commission
$21,780
Appraisal fee
600
Exterminator's certificate
300
Recording fees
800
Mortgage to First Bank
305,000
Cash to seller
34,520
Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2021, Wesley
purchases another residence for $325,000.
If an amount is zero, enter "0".
a. Calculate Wesley's recognized gain on the sale.
b. What is Wesley's adjusted basis for the new residence?
c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence?
Wesley's recognized gain is
and his adjusted basis for the new residence is $
Transcribed Image Text:Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2021, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2021, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2021. The closing statement showed the following disbursements: Real estate agent's commission $21,780 Appraisal fee 600 Exterminator's certificate 300 Recording fees 800 Mortgage to First Bank 305,000 Cash to seller 34,520 Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2021, Wesley purchases another residence for $325,000. If an amount is zero, enter "0". a. Calculate Wesley's recognized gain on the sale. b. What is Wesley's adjusted basis for the new residence? c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence? Wesley's recognized gain is and his adjusted basis for the new residence is $
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