Case Scenario:
Sylvia, a dentist with excellent skills as a carpenter, started the construction of a house that she planned to give to her son as a surprise when he returned from Saudia Arabia, where he is serving in the military. She began construction on March 23, 2005, and finished the house on July 10, 2006, at a total cost of $70,000. Her son is expected to be home on September 1, 2006. On July 30, 2006, Roscoe offered Sylvia $245,000 for the house and Sylvia considered the offer to be so attractive that she accepted it. She decided that she could purchase a suitable home for her son for about $200,000. What tax issues should Sylvia consider?