This year, Fred and Wilma sold their home (sales price $750,000; cost $200,000). All closing costs were paid by the buyer. Fred and Wilma owned and lived in their home for 20 years. How much of the gain is included in gross income?

Question

Quizplus · Accepted Answer

Fred and Wilma can exclude up to $500,000 of the gain from the sale of their home because they meet the ownership and use tests for the home sale exclusion. The gain is $550,000 ($750,000 - $200,000), so $50,000 is included in gross income.

This Year, Fred and Wilma Sold Their Home (Sales Price