William and Kate married in 2018 and purchased a new home together. Each had owned and lived in separate residences for the past 5 years. William's adjusted basis in his old residence was $200,000; Kate's adjusted basis in her old residence was $120,000. In late 2018, William sells his residence for $500,000 while Kate sells her residence for $190,000. What is the total gain to be excluded from these transactions in 2018?

Question

Quizplus · Accepted Answer

William can exclude up to $250,000 of gain from the sale of his residence, and Kate can exclude up to $250,000 of gain from the sale of her residence, provided they meet the ownership and use tests. William's gain is $300,000 ($500,000 - $200,000), and Kate's gain is $70,000 ($190,000 - $120,000). William can exclude $250,000, and Kate can exclude $70,000, totaling $320,000.

William and Kate Married in 2018 and Purchased a New