Norman Nunn had purchased his residence on January 12, 2011, for $155,000 and then sold it on April 12, 2012 for $475,000 because of illness. How much gain must Norman recognize?

Question

Quizplus · Accepted Answer

Norman can exclude $156,250 ($250,000 times 15 months divided by 24 months = $156,250). He must recognize $163,750, the diﬀerence between the realized gain of $320,000 ($475,000 less $155,000) and the exclusion of $156,250.

Norman Nunn Had Purchased His Residence on January 12, 2011