• 100% Satisfaction Guarantee
Category: Tax
Satisfied Customers: 28321
Experience:  Taxes, Immigration, Labor Relations
870116
Lev is online now

# Mathew Murphy, single, sold his home that he had owned for

### Customer Question

Mathew Murphy, single, sold his home that he had owned for 20 years for \$670,000. He purchased it for \$110,000 and made \$40,000 of capital improvements on the home during his time of ownership.(a) How much gain is excluded? How much is recognized?
(b) If Mathew purchased another home for \$420,000, how much is excluded and recognized?
JA: The Accountant will know how to help. Please tell me more, so we can help you best. Is there anything else important you think the Accountant should know?
Customer: No
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the \$5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.
(a) How much gain is excluded? How much is recognized?His adjusted basis is\$110,000 (original purchase price) PLUS \$40,000 (capital improvements) = \$150,000His realized gain\$670,000 9selling price) MINUS \$150,000 (adjusted basis) = \$520,000As a single person who used the property as a primary residence at least two out of last five years before teh sale - he is entitled for section 121 exclusion - \$250,000So - his recognized gain would be\$520,000 (realized gain MINUS \$250,000 (section 121 exclusion) = \$270,000That is recognized gain.
Expert:  Lev replied 10 months ago.
(b) If Mathew purchased another home for \$420,000, how much is excluded and recognized?That is not relevant facts as related to the old law which was replaced in 1997..I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.