Problem
Fernando originally sold his principal residence in an installment sale for $150,000. At the time, his adjusted basis in the home was $110,000. He qualified for the Section 121 exclusion, so his gain was not included in his taxable income for the year of sale. Three years later, he repossessed the home from the buyer when the balance of the note was $135,000. He spent $4,000 on improvements and resold it within the year for $160,000. What is Fernando's recomputed adjusted basis in the property?