On January 15, 2010, Kelly, a 48 year old widow, buys a new residence for $280,000. On the same day,she sells her old residence (adjusted basis of $110,000) for $297,000.Real estate commissions and legal fees total $20,000. She purchased the old residence on February 15, 2008, and occupied it as her principal residence from that date until Janruary 15. 2010. Between April 1 and June 30,2010, she constructs an addition to her new house T cost of $20,000.
a. What is Kelly's realized gain or loss?
b. Kelly's recognized gain or loss?
c. Kelly's basis for the new residence?
d. Under part (b), what could Kelly have done to producea better tax result?