Carl Sells His Principal Residence, Which Has an Adjusted Basis

question 49

Multiple Choice

Carl sells his principal residence, which has an adjusted basis of $150,000, for $200,000.He incurs selling expenses of $20,000 and legal fees of $2,000.He had purchased another residence for $380,000 one month prior to the sale.What is the recognized gain or loss and the basis of the replacement residence if the taxpayer elects to forgo the § 121 exclusion (exclusion of gain on sale of principal residence) ?

• A)$0 and $380,000.
• B)$0 and $408,000.
• C)$28,000 and $352,000.
• D)$28,000 and $380,000.

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