Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's realized gain is:

Name: Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's realized gain is:
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Question

Quizplus · Accepted Answer

Sam's realized gain is calculated by subtracting his adjusted basis (original cost + improvements) from the selling price. 
Adjusted basis = $200,000 + $50,000 = $250,000
Realized gain = $260,000 - $250,000 = $10,000. Therefore the answer is C.

Sam Bought a House for $200,000