During 2018, Zeke and Alice, a Married Couple, Decided to Sell

Multiple Choice

During 2018, Zeke and Alice, a married couple, decided to sell their residence, which had a basis of $200,000. They had owned and occupied the residence for 20 years. To make it more attractive to prospective buyers, they had the inside painted in April at a cost of $5,000 and paid for the work immediately. They sold the house in May for $800,000. Broker's commissions and other selling expenses amounted to $50,000. They purchased a new residence in July for $400,000. What is the recognized gain and the adjusted basis of the new residence?

A) $45,000 and $400,000.
B) $50,000 and $400,000.
C) $100,000 and $600,000.
D) $550,000 and $800,000.
E) None of the above.