Answer:
Karl
a. Karl's recognized gain is $55,000
Karl's basis for the new residence is $367,000
b. Karl's recognized gain is $55,000
Karl's basis for the new residence is $367,000
Explanation:
a) Data and Calculations:
Initial cost of residence = $260,000
Selling price of the residence = $315,000
Cost of new residence = $367,000
Date of lease = January 2, 2019
Date of sale = August 1, 2020
Date of purchasing a new residence = June 13, 2020
a. Karl's recognized gain is $55,000 ($315,000 - $260,000)
Karl's basis for the new residence is $367,000
b. Karl's recognized gain is $55,000 ($315,000 - $260,000)
Karl's basis for the new residence is $367,000