Reference no: EM132972874

Question 1 - Alexis buys a house in the mountains for $600,000 which she uses as her personal vacation home. She builds an additional room on the house for $40,000. She sells the property for $710,000 and pays $28,000 in commissions and $4,000 in legal fees in connection with the sale. What is the recognized gain or loss on the sale of the house?

Question 2 - Mr. and Mrs. Lucky sold their principal residence for $990,000, as a way of getting their kids to move out of the house. They had lived in their house for 20 years and it had an adjusted basis of $400,000. They paid commissions on the sale of $35,000. The Lucky's have decided not to purchase a new condo on the beach. What amount of gain must be recognized on this transaction? They are both actively employed as Chicago Public School teachers.