During 2014,Zeke and Alice,a Married Couple,decided to Sell Their Residence,which

question 15

Multiple Choice

During 2014,Zeke and Alice,a married couple,decided to sell their residence,which had a basis of $200,000.They had owned and occupied the residence for 20 years.To make it more attractive to prospective buyers,they had the inside painted in April at a cost of $5,000 and paid for the work immediately.They sold the house in May for $800,000.Broker's commissions and other selling expenses amounted to $50,000.They purchased a new residence in July for $400,000.What is the recognized gain and the adjusted basis of the new residence?

• A)$45,000 and $400,000.
• B)$50,000 and $400,000.
• C)$100,000 and $600,000.
• D)$550,000 and $800,000.
• E)None of these.

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Definitions:

Price Charged

The amount of money demanded by a seller for a product or service.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to efficient pricing and output levels.

Organic

Pertaining to or derived from living organisms, in food production referring to practices that do not use synthetic pesticides or fertilizers.

Profit

The profit achieved when the revenue generated from a business operation surpasses the expenses, costs, and taxes needed to maintain the operation.