Paula Inherits a Home on July 1,2013,that Had a Basis

question 67

Multiple Choice

Paula inherits a home on July 1,2013,that had a basis in the hands of the decedent at death of $290,000 and a fair market value of $500,000 at the date of the decedent's death.She decides to sell her old principal residence,which she has owned and occupied for 9 years,with an adjusted basis of $125,000 and move into the inherited home.On September 16,2013,she sells the old residence for $600,000.Paula incurs selling expenses of $30,000 and legal fees of $2,000.She decides to add a pool,deck,pool house,and recreation room to the inherited home at a cost of $100,000.These additions are completed and paid for on November 1,2013.What is her recognized gain on the sale of her old principal residence and her basis in the inherited home?

• A)$0; $500,000.
• B)$193,000; $600,000.
• C)$443,000; $600,000.
• D)$475,000; $600,000.
• E)None of the above.

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Definitions:

Memos

Short for memorandums, these are concise written communications typically used within an organization to share information or instructions.

Always

At all times; on all occasions.

Average

A mathematical concept that represents the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Perfect

Perfect is an adjective signifying something that is completely free from faults or defects, or matches an ideal standard of excellence.