Tanner,who is single,purchased a house on April 15,2003 for $215,000.During the time Tanner owned the house,he installed a swimming pool at a cost of $21,000 and replaced the deck at a cost of $18,000.On August 5,2017,Tanner sold the house for $570,000.Tanner paid a sales commission of $30,000 and legal fees of $800 connected with the sale of the house.What is Tanner's recognized gain on the sale of the house?
A)$0.
B)$35,200.
C)$250,000.
D)$285,200.

Question

Quizplus · Accepted Answer

Tanner's recognized gain is calculated by subtracting the adjusted basis and selling expenses from the selling price. The adjusted basis is the original purchase price plus improvements: $215,000 + $21,000 + $18,000 = $254,000. Selling expenses are $30,000 + $800 = $30,800. The selling price is $570,000. The gain before exclusions is $570,000 - $254,000 - $30,800 = $285,200. Since Tanner is single, he can exclude up to $250,000 of the gain from the sale of his primary residence. Therefore, the recognized gain is $285,200 - $250,000 = $35,200.

Tanner,who Is Single,purchased a House on April 15,2003 for $215,000