On January 5,2011,Bill Sells His Principal Residence with an Adjusted

question 49

Essay

On January 5,2011,Bill sells his principal residence with an adjusted basis of $212,000 for $550,000.He has owned and occupied the residence for 18 years.He pays $30,000 in commissions and $2,000 in legal fees in connection with the sale.One month before the sale,Bill painted the exterior of the house at a cost of $5,000 and repaired various items at a cost of $3,000.On October 15,2011,Bill purchases a new home for $525,000.On November 15,2012,he pays $25,000 for completion of a new room on the house,and on January 14,2013,he pays $15,000 for the construction of a pool.What is the Bill's recognized gain on the sale of his old principal residence and what is the basis for the new residence?

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Definitions:

Physiological Desire

A fundamental need stemming from the body's biological functions, such as hunger, thirst, or the need for sleep.

Psychological Desire

An emotional state that compels individuals towards a specific need or want, influencing behavior.

Unfulfilled

A state or condition where expectations, needs, or goals have not been met or achieved.

Lower-order Needs

Basic human necessities such as physiological and safety needs, according to Maslow’s hierarchy.