On February 1, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, Alan sold this residence for $460,000 because he decided to move in with his girlfriend. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Question

Quizplus · Accepted Answer

Alan must recognize a gain of $60,000, which is the difference between the selling price ($460,000) and the purchase price ($400,000). The fact that he lived in the home for only 150 days does not qualify him for any exclusion of gain on the sale of a personal residence, as the IRS requires a minimum of 2 years of ownership and use during the 5-year period ending on the date of the sale to qualify for the exclusion.

On February 1, Alan, a Single Individual, Purchased His First