Evelyn,a calendar year taxpayer,lists her principal residence with a realtor on February 7,2016,enters into a contract to sell on July 12,2016,and sells (i.e. ,the closing date)the residence on August 1,2016.The realized gain on the sale is $225,000.Which date is the appropriate ending date in determining if the residence has been owned and used by the Evelyn as the principal residence for at least two years during the prior five-year period?
A)February 7,2016.
B)July 12,2016.
C)August 1,2016.
D)December 31,2016.
E)None of the above.

Question

Quizplus · Accepted Answer

The appropriate ending date is the date of sale or August 1, 2016 in this case. This is because the requirement is to have used the residence as the principal residence for at least two years during the five-year period prior to the sale, and August 1, 2016, is within that five-year period. The other dates, including February 7, 2016 (listing date), July 12, 2016 (contract date), and December 31, 2016 (calendar year end), do not have any bearing on the length of time the residence was used as the principal residence by Evelyn.

Evelyn,a Calendar Year Taxpayer,lists Her Principal Residence with a Realtor