Sue,a single taxpayer,purchased a principal residence in 2001 for $415,000.In 2005,she paid $18,000 to add a sunroom.This year,Sue sold the residence for $686,000.Her selling expenses were $5,000.How much gain must Sue recognize on the sale?

Question

Quizplus · Accepted Answer

Sue's adjusted basis in the home is $433,000 ($415,000 + $18,000). Her amount realized from the sale is $681,000 ($686,000 - $5,000). The gain on the sale is $248,000 ($681,000 - $433,000). As a single taxpayer, she can exclude up to $250,000 of gain on the sale of her principal residence, so she recognizes $0 gain.

Sue,a Single Taxpayer,purchased a Principal Residence in 2001 for $415,000