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George and his wife Wendy purchased a lot in 2010 for $1,500,000 (they paid $1,000,000...

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Accounting

George and his wife Wendy purchased a

lot in 2010 for $1,500,000 (they paid $1,000,000 and borrowed $500,000 from a bank). In 2015, they built their home on the lot at a cost of $500,000 and moved in. This was their primary residence. In 2017they made improvements to the home for $100,000. They sold their home in 2023 for $2,600,000.

a) What was their basis?

b) Amount of gain realized?

c) Amount of gain recognized?

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