Paula Inherits a Home on July 1,2010,that Had a Basis

Multiple Choice

Paula inherits a home on July 1,2010,that had a basis in the hands of the decedent at death of $180,000 and a fair market value of $345,000 at the date of the decedent's death.She decides to sell her old principal residence,which she has owned and occupied for 9 years,with an adjusted basis of $95,000 and move into the inherited home.On September 16,2010,she sells the old residence for $490,000.Paula incurs selling expenses and legal fees of $34,000.She decides to add a pool,deck,pool house,and recreation room to the inherited home at a cost of $85,000.These additions are completed and paid for on November 1,2010.What is her recognized gain on the sale of her old principal residence and her basis in the inherited home?

A) $0;$180,000.
B) $111,000;$265,000.
C) $361,000;$265,000.
D) $361,000;$430,000.
E) None of the above.