On February 1,2019,Stephen (who is single)sold his principal residence (home 1)at a $100,000 gain.He was able to exclude the entire gain on his 2019 tax return.Stephen purchased and moved into home 2 on the same day.Assuming Stephen lives in home 2 as his principal residence until he sells it,which of the following statements is true?

Question

Quizplus · Accepted Answer

The rules for excluding gain on the sale of a principal residence allow for an exclusion of up to $250,000 ($500,000 for married taxpayers filing jointly) of gain if the taxpayer meets certain ownership and use tests. If Stephen meets these tests for both homes, he may be eligible to exclude gain on the sale of home 2, even if he sells it in 2019. It is not necessary for him to wait until 2024 (as stated in choice B), and it is not true that he can under no circumstance exclude gain on home 2 (as stated in choice A). Therefore, the correct answer is C.

On February 1,2019,Stephen (Who Is Single)sold His Principal Residence (Home