J and H sold their jointly owned residence at a $325,000 gain during the current year.J owned the residence for four years and lived in it the entire time.After their wedding, J transferred a one-half interest to H, who immediately moved in and lived in the home for 18 months.J and H can exclude only $250,000 of their gain.

Question

Quizplus · Accepted Answer

J and H can exclude up to $500,000 of gain if both meet the ownership and use tests. However, H does not meet the two-year use test, so they can only exclude $250,000, which is the maximum exclusion for one qualifying owner.

J and H Sold Their Jointly Owned Residence at a $325,000