Yolanda buys a house in the mountains for $450,000 which she uses as her personal vacation home.She builds an additional room on the house for $40,000.She sells the property for $560,000 and pays $28,000 in commissions and $4,000 in legal fees in connection with the sale.What is the recognized gain or loss on the sale of the house?

Question

Quizplus · Accepted Answer

Amount realized ($560,000 - $28,000 - $4,000)$528,000
Adjusted basis ($450,000 + $40,000)(490,000)
Realized gain $ 38,000
Recognized gain $ 38,000

Yolanda Buys a House in the Mountains for $450,000 Which