Virginia,who is single,sells her principal residence (adjusted basis of $150,000)on January 5,2010,for $380,000.She has owned and occupied it as her principal residence for 20 years.She incurs a realtor's commission of $22,000 and legal fees of $5,000.On January 3,2010,Virginia purchases a townhouse for $300,000 and uses it as her principal residence.Because it was not near a convenience store,she sells the townhouse on December 20,2010,for $330,000.She incurs a realtor's commission of $18,000 and legal fees of $4,000.She buys a house on December 1,2010,for $250,000 and uses it as her principal residence.What is Virginia's recognized gain on the sale of each house and her adjusted basis for the house purchased on December 1,2010?
A)$0;$0;and $250,000.
B)$0;$8,000;and $250,000.
C)$203,000;$0;and $250,000.
D)$0;$8,000;and $47,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Virginia's gain on the sale of her principal residence is excluded up to $250,000, so she recognizes no gain on the first sale. For the townhouse, the gain is $330,000 - $300,000 - $18,000 - $4,000 = $8,000. The adjusted basis for the new house is its purchase price, $250,000.

Virginia,who Is Single,sells Her Principal Residence (Adjusted Basis of $150,000)on