Jenna,who is single,sold her principal residence on December 1,2014,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 1,2015 that she occupied until July 1,2015 when she receives a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2015 and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2015?
A)$0
B)$10,000
C)$20,000
D)$40,000

Question

Quizplus · Accepted Answer

To be eligible for the exclusion under Sec. 121, the taxpayer must have owned and used the property as a principal residence for at least two out of the five years preceding the sale. In this case, Jenna met the ownership and usage requirements for the residence sold on December 1, 2014, but did not meet the ownership requirement for the Pensacola residence sold on October 1, 2015, as she owned it for less than one year. Therefore, she cannot exclude any of the gain from the sale on October 1, 2015.

Jenna,who Is Single,sold Her Principal Residence on December 1,2014,and Excluded