Paula inherits a home on July 1, 2019 that had a basis in the hands of the decedent at death of $290,000 and a fair market value of $500,000 at the date of the decedent's death. Paula decides to sell her old principal residence, which she has owned and occupied for nine years, with an adjusted basis of $125,000 and move into the inherited home. On September 16, 2019, she sells the old residence for $600,000. Paula incurs selling expenses of $30,000 and legal fees of $2,000. She decides to add a pool, deck, pool house, and recreation room to the inherited home at a cost of $100,000. These additions are completed and paid for on November 1, 2019. What is her recognized gain on the sale of her old principal residence and her basis in the inherited home?
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