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What gain or loss do the jacobys realize and recognize on

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Question: Assume that on March 1, 2022, the Jacobys sold their home for $302,000, so that Derek and Meagan could accept job opportunities in a different state. The Jacobys used the sale proceeds to (1) pay off the $210,000 principal of the mortgage, (2) pay a $10,000 commission to their real estate broker, and (3) make a down payment on a new home in the different state. However, the new home cost only $157,500. Assume they make interest-only payments on the loan.

1. What gain or loss do the Jacobys realize and recognize on the sale of their home?

2. What amount of taxes must they pay on the gain, if any?

e. Assume the same facts as in part (d), except that the Jacobys sell their home for $251,000 and they pay a $7,500 commission. What effect does the sale have on their 2022 income tax liability? Recall that the Jacobys are subject to an ordinary marginal tax rate of 20 percent, and assume that they do not have any other transactions involving capital assets in 2022.

Reference no: EM133522260

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