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James and Ellen Connors,who Are Both 50 Years Old and Married,sell

question 43

Essay

James and Ellen Connors,who are both 50 years old and married,sell their personal residence on July 25,2013 for $950,000.They have lived in the home for 20 years.The basis of the home is $350,000.They purchased a new home for $1,000,000 in August 2013.After living in that home for 219 days,the Connors were forced to sell their new home in 2014 for $1,300,000 and move to another climate due to Ellen's severe health problems.
a.What is the amount of gain recognized on the home sale in 2013?
b.What is the amount of the gain recognized on the home sale in 2014?


Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Unit Contribution Margin

The difference between the selling price of a unit and its variable costs, indicating how much each unit contributes to covering fixed costs and generating profit.

Sales Volume

The total number of units sold within a specific period, often used as an indicator of business performance.

Variable Expense

Costs that change in proportion to the level of production or sales activity.

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