Carlos, Who Is Single, Sells His Personal Residence on November

question 134

Essay

Carlos, who is single, sells his personal residence on November 5, 2017, for $400,000. His adjusted basis was $125,000. He pays realtor's commissions of $20,000. He owned and occupied the residence for 12 years. Having decided that he no longer wants the burdens of home ownership, he invests the sales proceeds in a mutual fund and enters into a 1-year lease on an apartment. The detriments of renting, including a crying child next door, cause Carlos to rethink his decision. Therefore, he purchases another residence on November 6, 2018, for $275,000. Is Carlos eligible for exclusion of gain treatment under § 121 (exclusion of gain on sale of principal residence)? Calculate Carlos's recognized gain and his basis for the new residence.

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Definitions:

Ampule

A sealed glass capsule containing a liquid, especially a sterile solution for injection.

Bottle-Feed

Bottle-feed means to feed a baby or animal with milk or liquid food using a bottle, often as an alternative to breastfeeding.

Cleansing

The process of making something clean, often referring to hygiene practices or the removal of impurities from the body.

Bottled Water

Water that is packaged in bottles for consumption, often purified or sourced from springs or mineral wells.