Larry owned and lived in a home for five years before marrying Darlene. Larry and Darlene lived in the home for one year before selling it at a $600,000 gain. Larry was the sole owner of the residence until it was sold. How much of the gain may Larry and Darlene exclude?

Question

Quizplus · Accepted Answer

Larry owned and lived in the home for five years, which means he meets the ownership test for excluding up to $250,000 of the gain. Additionally, Larry and Darlene lived in the home for one year, which means they meet the use test for excluding the same amount. Therefore, they may exclude up to $250,000 of the $600,000 gain.

Larry Owned and Lived in a Home for Five Years