The only thing I question in the referenced instructions, is using the amount from the 1099-S (if that form was issued). Generally, that form may only show the amount of cash disbursed to the seller at the closing. That disbursement may not include everything. For example, if the seller has an outstanding mortgage on the house, the title/closing company will usually withhold the funds needed to pay off that existing loan and pay it off on behalf of the seller. The loan payoff amount is not deductible by anyone. Only the interest paid on the loan is deductible by the seller. So it's not at all uncommon for that payoff amount to not be included on the 1099-S.
Bottom line is, the contracted sales price as shown on the ALTA settlement statement takes precedent over all.
