Sue, a single taxpayer, purchased a principal residence in 2009 for $415,000. In 2012, she paid $18,000 to add a sunroom. This y

Question

2 years ago

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Sue, a single taxpayer, purchased a principal residence in 2009 for $415,000. In 2012, she paid $18,000 to add a sunroom. This y

ear, Sue sold the residence for $686,000. Her selling expenses were $5,000. How much gain must Sue recognize on the sale

Business

1 answer:

BabaBlast [244] · Answer 1 · 2023-02-28T21:34:36+03:00

Sue must recognize the gain of $0 on the sale. Let's see how.

Lets calculate the gain on the sale of the residence.

Gain = Selling Price+ selling expenditure- Cost basis

= 686000-5000- 433000

= $ 248,000

Cost Basis = Cost+ Improvements

= 415000+ 18000

=$ 433000

Lets discuss the gain to be recognized now.

According to the IRS publication 523, the gain from the sale of main home upto $250,000 are not included in income. Moreover, Sue has kept the house for more than 24 months. Here, the gain is $248,000 which is below the amount of $250,000.

Hence, the entire gain is excluded.

So, Sue has to recognize $0 on the sale.

To learn more about gain, refer: brainly.com/question/1153322

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