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In: Accounting

Phil, 35 years old is an accountant. He receives medical insurance and fringe benefits from the...

  • Phil, 35 years old is an accountant. He receives medical insurance and fringe benefits from the employee. His wife, Sharon is 33 years old and works part time as office manager. They have 1 child, Amy 4 years old (qualifies for the $2,000 child care credit. They live in NYC and Sharon’s mother cares for Amy at no cost.  

Assume Phil and Sharon sold their primary residence in the current year. They meet all of the requirements to qualify for exclusion provisions afforded to home owners.  They paid $285,000 to purchase the house. They sold the house for $900,000. How much of gain on the sale of their primary home is subject to tax?

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Ans: Since The primary residence exclusion can exempt as much as $500000 of net profit from capital gains tax for married couples filing jointly

Sale proceeds= $900,000

Purchase price of the property= 285,000

Gain on sale of primary home subjected to Tax= (Sale proceeds- purchase price of the property)- $500,000

= 900,000-285,000)-500,000

=$115,000

ekkarill92 answered 2 years ago
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