Jenna,who is single,sold her principal residence on December 1,2013,and excluded the $150,000 gain because she met the ownership and usage requirements under Sec.121.Jenna purchased another residence in Pensacola on January 1,2014 that she occupied until July 1,2014 when she receives a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2014 and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2014?
A)$0
B)$10,000
C)$20,000
D)$40,000

Question

Quizplus · Accepted Answer

According to the Sec.121, a taxpayer must own and use the property as the principal residence for at least two out of the five years preceding the sale. Jenna met both ownership and usage requirements on the residence she sold on December 1, 2013, and excluded the gain. However, Jenna did not own and use the Pensacola residence for at least two years since she only owned and lived in it for seven months. Therefore, she cannot exclude the $40,000 gain from the sale on October 1, 2014.

Jenna,who Is Single,sold Her Principal Residence on December 1,2013,and Excluded