Reference no: EM132660014
Problem - Wesley, who is single, listed his personal residence with a real estate agent on March 3, 2019, at a price of $390,000. He rejected several offers in the $350,000 range during the summer. Finally, on August 16, 2019, he and the purchaser signed a contract to sell for $363,000. The sale (i.e., closing) took place on September 7, 2019. The closing statement showed the following disbursements:
Real estate agent's commission $21,780
Appraisal fee 600
Exterminator's certificate 300
Recording fees 800
Mortgage to First Bank 305,000
Cash to seller 34,520
Wesley's adjusted basis for the house is $200,000. He owned and occupied the house for seven years. On October 1, 2019, Wesley purchases another residence for $325,000.
Required -
a. Calculate Wesley's recognized gain on the sale.
b. What is Wesley's adjusted basis for the new residence?
c. Assume instead that the selling price is $800,000. What is Wesley's recognized gain? His adjusted basis for the new residence?
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