Reference no: EM131820000

Question - George and Sally sold their primary residence in New Jersey on January 1, 2010 after having lived in the home for 20 years. (They used their $500,000 exclusion to avoid recognizing their $289,000 gain on the sale.) They decided to become permanent Florida residents and moved into the condominium they had purchased on January 2, 2007 at a foreclosure auction. Unfortunately, Sally missed all of her friends and family in New Jersey and in the latter part of 2011, they put the condominium up for sale and they sold it on January 2, 2012. They had purchased the condominium for only $65,000 and after putting in improvements at a cost of only $21,000, they were able to sell it for $525,000. What is their realized and recognized gain on the sale of the condominium?