Kendra owns a home in Atlanta.Her company transfers her to Chicago on January 2, 2019, and she sells the
Atlanta house in early February 2019.She purchases a residence in Chicago on February 3, 2019.On December 15,
2019, Kendra's company transfers her to Los Angeles.In January 2020, she sells the Chicago residence and purchases a residence in Los Angeles.Because multiple sales have occurred within a two-year period, § 121 treatment does not apply to the sale of the second home.

Question

Quizplus · Accepted Answer

Section 121 of the Internal Revenue Code allows for the exclusion of gain from the sale of a principal residence if the homeowner has owned and used the home as their principal residence for at least two of the five years prior to the sale. The fact that multiple sales have occurred within a two-year period does not automatically disqualify a homeowner from § 121 treatment; each sale must be evaluated individually to determine if the ownership and use tests are met, and there are also special rules that may apply in the case of job-related moves.

Kendra Owns a Home in Atlanta