Alicia buys a beach house for $425,000 which she uses as her personal vacation home.She builds an additional room on the house for $45,000.She sells the property for $510,000 and pays $30,000 in commissions and $4,000 in legal fees in connection with the sale.What is the recognized gain or loss on the sale of the house?
A)$0.
B)$6,000.
C)$30,000.
D)$40,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The recognized gain is calculated as follows: Selling price ($510,000) - Selling expenses ($30,000 + $4,000) - Adjusted basis (Purchase price $425,000 + Improvement $45,000) = $510,000 - $34,000 - $470,000 = $6,000.

Alicia Buys a Beach House for $425,000 Which She Uses