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:

Instinctual

Relating to or based on instinct, innate patterns of behavior that are not learned.

Gender Role

A set of expectations that prescribes how females or males should think, act, and feel.

Nurturing

Providing care, support, and encouragement, fostering growth and development.

Androgens

A group of hormones that play a role in male traits and reproductive activity; present in both males and females.