Paula Inherits a Home on July 1,2014 That Had a Basis

question 33

Multiple Choice

Paula inherits a home on July 1,2014 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 16,2014,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 1,2014.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 these.

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Definitions:

Bowing Head

A physical gesture of lowering the head and torso slightly as a sign of respect, submission, or acknowledgment.

Hyperextension

An excessive extension of a limb or joint beyond its normal range of motion, often leading to injury.

Lateral Excursion

The side-to-side movement of the mandible, which is important in the grinding motion of chewing.

Plantar Flexion

The action of reducing the angle between the bottom of the foot and the back of the leg, similar to when the toes are pointed.