Question: In March 2011, Davis, who is single, purchased a new residence for $200,000. During that same month he sold his former residence for $380,000 and

In March 2011, Davis, who is single, purchased a new residence for $200,000. During that same month he sold his former residence for $380,000 and paid the realtor a $20,000 commission. The former residence, his first home, had cost

$65,000 in 1992. Davis added a bathroom for $5,000 in 2007. What amount of gain is recognized from the sale of the former residence on Davis’ 2011 tax return?

a. $160,000

b. $ 90,000

c. $ 40,000

d. $0

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