Kitty,who is single,sells her principal residence,which she has owned and occupied for 8 years,for $375,000.The adjusted basis is $64,000 and selling expenses are $22,000.She purchases another principal residence three months later for $200,000.Her recognized gain is $39,000 and her basis for the new principal residence is $200,000.

Question

Quizplus · Accepted Answer

Kitty's recognized gain is $311,000 ($375,000 - $64,000), not $39,000. Her basis for the new principal residence is $239,000 ($200,000 + $39,000), not $200,000.

Kitty,who Is Single,sells Her Principal Residence,which She Has Owned and Occupied