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?
A)$0.
B)$3,125.
C)$31,250.
D)$35,000.

Question

Quizplus · Accepted Answer

To meet the requirements for exclusion of gain of a principal residence, the taxpayer must have owned and used the property as a principal residence for at least two of the five years preceding the sale. Jamie meets these requirements as she purchased and moved into the home on November 1, year 1, and sold it on February 1, year 2. The maximum amount of gain that can be excluded is $250,000 for a single taxpayer. As Jamie’s gain is $35,000, she can exclude the full amount from her gross income in year 2. Therefore, the answer is C, $31,250.

On November 1, Year 1, Jamie (Who Is Single)purchased and Moved