On February 1,2017 Stephen (who is single)sold his principal residence (home 1)at a $100,000 gain.He was able to exclude the entire gain on his 2017 tax return.Stephen purchased and moved into home 2 on the same day.Assuming Stephen lives in home 2 as his principal residence until he sells it,which of the following statements is true?

Question

Quizplus · Accepted Answer

Stephen may be able to exclude gain on home 2 even if he sells home 2 in 2017 if any of the following circumstances are met:
1. Stephen lives in home 2 as his principal residence for at least 2 years out of the 5-year period ending on the date of sale.
2. Stephen meets the requirements for unforeseen circumstances, such as a job loss or divorce, that force him to sell the home before the 2-year period is over. In such cases, Stephen's exclusion is prorated based on the length of time he lived in the home as his principal residence.

On February 1,2017 Stephen (Who Is Single)sold His Principal Residence