Pierce, a single person age 60, sold his home this year. He had lived in the house for 10 years. He signed a contract on March 4 to sell his home. $$\begin{array} { | l | r | }
\hline \text { Sales price } & \$ 600,000 \
\hline \text { Selling expenses } & 15,000 \
\hline \text { Replaced and paid for a broken window on March 2 } & 800 \
\hline \text { Basis of old home before repairs and improvements } & 310,000 \
\hline
\end{array}$$ Based on these facts, what is the amount of his recognized gain?

Question

Pierce, a single person age 60, sold his home this year. He had lived in the house for 10 years. He signed a contract on March 4 to sell his home. $$\begin{array} { | l | r | } 
\hline \text { Sales price } & \$ 600,000 \
\hline \text { Selling expenses } & 15,000 \
\hline \text { Replaced and paid for a broken window on March 2 } & 800 \
\hline \text { Basis of old home before repairs and improvements } & 310,000 \
\hline
\end{array}$$ Based on these facts, what is the amount of his recognized gain?

Quizplus · Accepted Answer

Pierce can exclude up to $250,000 of gain from the sale of his primary residence. The gain is calculated as the sales price ($600,000) minus selling expenses ($15,000) and the adjusted basis ($310,000 + $800 for the window repair), resulting in a gain of $274,200. After excluding $250,000, the recognized gain is $24,200, rounded to $25,000.

Pierce, a Single Person Age 60, Sold His Home This