Gain/Loss On Disposition Of Property Practice Test

An individual purchased a personal residence for $500,000 and later made kitchen renovations costing $40,000 that are capital improvements. The taxpayer sold the home for $575,000 and paid $35,000 in selling expenses. Determine the adjusted basis and resulting gain or loss for tax purposes.

A taxpayer completes a Section 1031 like-kind exchange of investment real estate. The taxpayer transfers property with an adjusted basis of $150,000 and a fair market value of $210,000, and receives replacement property worth $195,000 plus $15,000 cash. Determine the adjusted basis and resulting gain or loss for tax purposes.