Question

During 2020, Sam and Libby, a married couple, decided to sell their residence, which had a basis of $200,000. They had owned and occupied the residence for 20 years. To make it more attractive to prospective buyers, they had the inside painted in April at a cost of $5,000 and paid for the work immediately. They sold the house in May for $800,000. Broker's commissions and other selling expenses amounted to $50,000. The couple purchased a new residence in July for $400,000. What is the recognized gain and the adjusted basis of the new residence

Answer 1

Answer:

$50,000:$400,000

Explanation:

Based on the information given we were told that the Broker's commissions and other selling expenses was the amount of $50,000 in which They as well made purchased of a new residence in July for the amount of $400,000 which means that the recognized gain will be $50,000 the amount of Broker's commissions and other selling expenses and the adjusted basis of the new residence will be $400,000 which is the cost of purchasing a new residence.