On February 1, 2012, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, 2012, Alan sold this residence for $460,000 because he wanted to rent a newly constructed condominium. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Question

Quizplus · Accepted Answer

Alan must recognize the entire gain of $60,000 because he did not meet the ownership and use tests required for the exclusion of gain on the sale of a principal residence, which typically requires living in the home for at least 2 out of the last 5 years.

On February 1, 2012, Alan, a Single Individual, Purchased His