Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 20

Virginia is an accountant for a global CPA firm. She is being temporarily transferred from the Raleigh, North Carolina, office to Tokyo. She will leave Raleigh on October 7, 2010, and will be out of the country for four years. She sells her personal residence on September 30, 2010 for $250,000 (her adjusted basis is $190,000). Upon her return to the United States in 2014, she purchases a new residence in Los Angeles for $220,000, where she will continue working for the same firm.
a. What are Virginia's realized and recognized gain or loss?
b. What is Virginia's basis in the new residence?