I:12-47 Sale of a Principal Residence: Rental Property. For the last five years, Mr. and Mrs.

Cockrell rented their furnished basement to local college students. When determining their taxable income each year, they deducted a portion of the utilities, property taxes, interest, and depreciation based on the fact that 15% of the house is used for rental purposes. The original basis of the property is $100,000, and depreciation of $4,000 has been allowed on the rental portion of the property. During the current year, Mr. and Mrs. Cockrell sell the house for $300,000. No selling expenses or fixing-up expenses are incurred. Determine:

a. realized gain on the sale.

b. recognized gain on the sale.