Question

Constanza, who is single, sells her current personal residence (adjusted basis of $253,500) for $709,800. She has owned and lived in the house for 30 years. Her selling expenses are $35,490. What is Constanza's realized and recognized gain

Answer 1

Answer and Explanation:

The computation is shown below:

Realized gain is

= Realized amount - adjusted basis

= $709,800 - $35,490 - $253,500

= $674,310 - $253,500

= $420,810

And, the recognized gain is

= Realized gain - exclusion

= $420,810 - $250,000

= $170,810

Since Constanza is single so the amount of $250,000 would be considered as an exclusion