Problem:
On July 1, 2014, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000. Ted's basis in his residence is $35,000. The expenses associated with the sale of his home total $20,000. On December 15, 2014, Ted purchases and occupies a new residence at a cost of $175,000. Calculate Ted's realized gain, recognized gain, and the adjusted basis of his new residence.
Required:
- Realized gain $310,000 ($365,000 - 35,000-20,000 = $310,000)
- Recognized gain $60,000___ ($310,000 - 250,000 =$60,000 (exclusion up to250,000)
- Adjusted basis of new residence $175,000
Note: Please show the work not just the answer.