Jenna,who is single,sold her principal residence on December 1,2015,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 1,2016 that she occupied until July 1,2016 when she receives a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2016 and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2016?
A)$0
B)$10,000
C)$20,000
D)$40,000

Question

Quizplus · Accepted Answer

In order to qualify for the exclusion under Sec.121, the taxpayer must both own and use the property as their principal residence for at least two out of the five years preceding the sale. In this case, Jenna only used the Pensacola residence as her principal residence for six months before selling it. Therefore, she does not meet the ownership and usage requirements and cannot exclude any of the gain from the sale.

Jenna,who Is Single,sold Her Principal Residence on December 1,2015,and Excluded