Donald and Candice Sell Their Home for $695,000, Incurring Selling $\begin{array}{llcc} \text { Realized } & \text { Recognized} \\\end{array}$

Short Answer

Donald and Candice sell their home for $695,000, incurring selling expenses of $30,000. They purchased the residence for $125,000 and made capital improvements totaling $20,000 during the 20 years they lived there. What is their realized gain and recognized gain on the sale?
?
$\begin{array}{llcc} \text { Realized } & \text { Recognized} \\\end{array}$
A) $\$ 665,000 \quad \$20,000$
B) $\$ 520,000 \quad \$-0-$
C) $\$ 520,000 \quad \$ 20,000$
D) $\$ 540,000 \quad \$40,000$
E) $\$520,000 \quad \$270,000$