During 2010, Ted and Judy, a married couple, decided to sell their residence, which had a basis of $225,000. They had owned and occupied the residence for 16 years. To make it more attractive to prospective buyers, they had the outside painted in April at a cost of $10,000 and paid for the work immediately. They sold the house in May for $795,000. Broker's commissions and other selling expenses amounted to $45,000. Since they both are age 68, they decide to rent an apartment. They purchase an annuity with the net proceeds from the sale. What is the recognized gain?
a) $0.
b) $15,000.
c) $25,000.
d) $525,000.