Karl purchased his residence on January $2,2022,$ for $$260,000,$ after having lived in it during $2021$ as a tenant under a lease with an option to buy clause. On August $1,2023,$ Karl sells the residence for $$315,000.$ On June $13,2023,$ Karl purchases a new residence for $$367,000.$

If an amount is zero, enter $"0".$

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a$.$ What is Karl's recognized gain? His basis for the new residence?

Karl's recognized gain is $fill in the blank $6$d$246$bf$72$fb$4$f$9$f$\_1$

$,$ and his basis for the new residence is $fill in the blank $6$d$246$bf$72$fb$4$f$9$f$\_2$

$.$

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A realized loss from the sale of a personal residence is not recognized. A realized gain from the sale of a personal residence is subject to taxation. However, favorable relief from recognition of gain is provided in the form of the $121$ exclusion.

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b$.$ Assume that Karl purchased his original residence on January $2,2021($rather than January $2,2022).$ What is Karl's recognized gain? His basis for the new residence?

Karl's recognized gain is $fill in the blank cb$741$d$04$dfb$9$fd$3\_1$

$,$ and his basis for the new residence is $fill in the blank cb$741$d$04$dfb$9$fd$3\_2$

$.$

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Incorrect

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c$.$ In part $($a$),$ what could Karl do to minimize his recognized gain?

To minimize his recognized gain, he can continue to own and occupy the residence for a minimum of fill in the blank fc$09$aff$91017$fb$7\_1$

additional months. Then, he may use the

$121$

exclusion to

reduce

his realized gain of $fill in the blank fc$09$aff$91017$fb$7\_4$

to $fill in the blank fc$09$aff$91017$fb$7\_5$

$.$