Answer:
$658,000
Explanation:
If John and Sheryl bought their home for $354,000 and made $129,000 of improvement, the total cost on purchasing the house will be coat of the house + improvement which gives $354,000+$129,000
= $483,000
If they later sold the home for $1,085,000 and paid $56,000 in selling expenses, including the broker's commission, the total selling cost will be $1,085,000+$56,000
= $1,141,000
Capital gain = $1,141,000 - $483,000
Capital gain = $658,000
This means they will pay capital gain tax on their interest which is $658,000
