Calvin and Carolyn Coleman purchased a home in San Francisco for $375,000 on October 1, 2011. Calvin obtained a job in Portland, Oregon, and on December 1, 2012, the Colemans sold their home in San Francisco for $650,000. How much gain must the Colemans recognize?

Question

Quizplus · Accepted Answer

the Colemans have owned and used the home for less than two years but because they are selling for a job- related reason, they may pro-rate the exclusion. the amount of exclusion is $291,667 ($500,000 × 14 months divided by 24 months = $291,667). Since the realized gain is only $275,000 ($650,000 less $375,000), they can exclude the whole $275,000 and need not recognize any gain.

Calvin and Carolyn Coleman Purchased a Home in San Francisco