On November 1, year 1, Jamie (who is single) purchased and moved into her principal residence. In the early part of year 2, Jamie was laid off from her job. On February 1, year 2, Jamie sold the home at a $35,000 gain. She sold the home because she found a new job in a different state. How much of the gain, if any, may Jamie exclude from her gross income in year 2?

Question

Quizplus · Accepted Answer

Jamie owned and used the home as her principal residence for at least 2 years out of the 5-year period before the sale. She also sold the home due to a change in employment that qualified as a "work-related move" under IRS rules. Therefore, Jamie may exclude up to $250,000 of the gain from her gross income in year 2. Since her gain was $35,000, she may exclude the entire amount, resulting in a taxable gain of $0.

On November 1, Year 1, Jamie (Who Is Single) Purchased