What is Karl recognized gain

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Problem - Karl purchased his residence on January 2, 2018, for $260,000, after having lived in it during 2017 as a tenant under a lease with an option to buy clause. On August 1, 2019, Karl sells the residence for $315,000. On June 13, 2019, Karl purchases a new residence for $367,000.

Required -

a. What is Karl's recognized gain? His basis for the new residence?

b. Assume instead that Karl purchased his original residence on January 2, 2017 (rather than January 2, 2018). What is Karl's recognized gain? His basis for the new residence?

c. In part (a), what could Karl do to minimize his recognized gain?

Reference no: EM132660017

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