Jim Sarowski (SSN 000-00-2222) is 70 years old and single. He received Social Security benefits of $16,000. He works part-time as a greeter at a local discount store and received wages of $7,300. Federal income taxes of $250 were withheld from his salary. Jim lives at Rt. 7 in Daingerfield, Texas. In March of 2015, he purchased a duplex at 2006 Tennessee Street to use as rental property for $100,000 with 20% of the price allocated to land. During the year, he had the following receipts and expenditures with respect to the duplex:

• Rent Receipts $8,800
• Interest Paid $5,900
• Property Taxes $1,400
• Insurance $800
• Maintenance $300

Other expenditures during the year:

• Contributions to the church $2,600
• Personal Property taxes $225
• Sales Tax $345

On July 24, he exchanged ten acres of land for a car with a $16,500 FMV to be held for personal use. The land was purchased on November 22, 1991, for $18,000 as an investment. Because of pollution problems in the area, the value of the land declined. On December 1, he sold his residence, which had been his home for 30 years, for $475,000. Sales commissions of $16,000 were paid, and the adjusted basis for his home is $110,000. He plans to rent an apartment and does not plan to purchase another home. His only other sale of a principal residence occurred 32 years ago.

1. Determine the amount of recognized gain on the sale of the residence.
2. Prepare Forms 4562 and 1040, including Schedules D and E.