Question
Paula inherits a home on July 1, 2011, that had a basis in the hands of the decedentat death of $290,000 and a fair market
Paula inherits a home on July 1, 2011, that had a basis in the hands of the decedentat death of $290,000 and a fair market value of $500,000 at the date of the decedentsdeath. She decides to sell her old principal residence, which she has owned and occupiedfor 9 years, with an adjusted basis of $125,000 and move into the inherited home. OnSeptember 16, 2011, she sells the old residence for $600,000. Paula incurs sellingexpenses of $30,000 and legal fees of $2,000. She decides to add a pool, deck, poolhouse, and recreation room to the inherited home at a cost of $100,000. These additionsare completed and paid for on November 1, 2011. What is her recognized gain on the sale of her old principal residence and her basis in the inherited home?
Please show calculations for her recognized gain. I know answer is 193,000 but can't figure out how to get the answer.
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