Winston Deavor lives in a house that he received as a gift from his father. His father had lived in the house for 25 years. The adjusted basis of the house to his father was $360,000 and the fair market value at the time of the gift was $320,000. Winston sells this residence after living in it for 18 months for $350,000 and purchases a new home for $425,000. He incurs selling expenses of $20,000.

a. What is Winstons recognized gain or loss?

b. What is Winstons basis in the new residence?