During 2014,Ted and Judy,a married couple,decided to sell their residence,which had a basis of $300,000.They had owned and occupied the residence for 20 years.To make it more attractive to prospective buyers,they had the outside painted in April at a cost of $6,000 and paid for the work immediately.They sold the house in May for $880,000.Broker's commissions and other selling expenses amounted to $53,000.Since they both are age 68,they decide to rent an apartment.They purchase an annuity with the net proceeds from the sale.What is the recognized gain?

Question

Quizplus · Accepted Answer

Amount realized ($880,000 - $53,000)$827,000
Adjusted basis (300,000)
Realized gain $527,000
§ 121 exclusion (500,000)
Recognized gain $ 27,000
The $6,000 of painting expenses affect neither the seller's amount realized nor adjusted basis.

During 2014,Ted and Judy,a Married Couple,decided to Sell Their Residence,which