1.Mr. and Mrs. Smith have recently sold the home that they have owned and lived in for the past 25 years. They purchased it for $250,000 and incurred $8,000 in closing costs. In addition, over the years they made $80,000 in capital improvements. They sold it $1,050,000. The expenses of sale came to $20,000.Calculate the following:

a.Adjusted basis?

b.Amount realized?

c.Gain ?

d.What type of gain is this?

e.How much of this gain will be taxable for the Smiths?