A.
Particulars | Amount | Remarks |
Purchase Cost of Home | $195,000 | |
Purchasing Cost | $1,450 | |
Addition of Family Room | $23,500 | |
Painting of Interior | 0 | This is considered as normal maintenance expenses and not added to cost. |
Total Basis | $219,950 | |
Less : Depreciation | $12,250 | |
Net Basis | $207,700 |
B.
Sales Proceeds | $289,000 |
Less - Cost of Sales | |
Commission on Sale | $16,340 |
Other Cost | $2,300 |
$270,360 |
Realized Gain | |
Net Sales Proceeds | $270,360 |
Less - Cost basis | $207,700 |
$62,660 |
C. Recognized Gain
As per IRS Gain on sale of home is exempt upto $250,000. In the given case Profit of $ 62,660 is realized but for tax purpose gain reported will be NIL as its less than 250,000 (which is exempt limit).
- Calculation of Gain Realized. M, single. purchased a residence on May 1, 2004 for $195,000. M lived in the residence...
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