Jenna,who is single,sold her principal residence on December 1,2016,and excluded the $150,000 gain because she met the ownership and usage requirements under Sec.121.Jenna purchased another residence in Pensacola on January 1,2017,that she occupied until July 1,2017,when she received a new job offer from an employer in Miami.She sells the Pensacola residence on October 1,2017,and realizes a gain of $40,000.Jenna may exclude what amount of the gain from the sale on October 1,2017?

Question

Quizplus · Accepted Answer

A)Since she has not met the two-year ownership and usage requirement on the Pensacola house the exclusion must be prorated.Months of usage in the Pensacola house are 6 months.The exclusion is 6/24,or 1/4 of $250,000 ($62,500).Therefore,none of the $40,000 gain is taxable.

Jenna,who Is Single,sold Her Principal Residence on December 1,2016,and Excluded