Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2018,
Question:
Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2018, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2018, he and the purchaser signed a contract co sell for $363,000. The sale (i.e., closing) took place on September 7, 2018. The closing statement showed the following disbursements:
Real estate agent's commission ........................... $ 21,780
Appraisal fee ........................................................... 600
Exterminator's certificate ..................................... 300
Recording fees ....................................................... 800
Mortgage to First Bank ......................................... 305,000
Cash to seller ......................................................... 34,520
Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2018, Wesley purchases another residence for $325,000.
a. Calculate Wesley's recognized gain on the sale.
b. What is Wesley's adjusted basis for the new residence'
c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain' His adjusted basis for the new residence?
Step by Step Answer:
South-Western Federal Taxation 2019 Essentials Of Taxation Individuals And Business Entities
ISBN: 9781337702966
22nd Edition
Authors: William A. Raabe, James C. Young, Annette Nellen, David M. Maloney