Tanner,who is single,purchased a house on April 15,2002 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 5,2016,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?

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Quizplus · Accepted Answer

Tanner's recognized gain is calculated as follows: Sale price ($570,000) - Sales commission ($30,000) - Legal fees ($800) - Original purchase price ($215,000) - Improvements ($21,000 + $18,000) = $285,200. However, since Tanner is single, he can exclude up to $250,000 of the gain from the sale of his primary residence, resulting in a recognized gain of $35,200.

Tanner,who Is Single,purchased a House on April 15,2002 for $215,000