3. Lou is 50, married and lives in Los Gatos. Lou sold his home early in...

3. Lou is 50, married and lives in Los Gatos. Lou sold his home early in 2019 to his neighbor, Godiva, for $ 790,000. Lou’s wife, Marsha, also age 50, talked Lou into relocating to Locust Pennsylvania, and so, they sold the home the two of them lived in for all of 2016, 2017, and 2018. Lou alone owned the house, and received it as a gift from his sister Rae, in 2013. Rae had originally bought the house for $ 150,000, and the house was worth about $200,000 when she gifted it to her brother Lou. Lou had added a swimming pool in the backyard of the house for a cost of $ 65,000 in 2014. Lou paid a sales commission to his realtor in 2019 of $ 22,000 for assisting in the sale. Lou is retired and lives off a private pension and stock dividends and gains. Lou’s pension, which is fully taxable, is $20,000 for 2019, and Lou’s qualified dividends for 2019 were $ 7,000. Lou also had a stock that he sold during 2019. This stock was bought in 2011 for $ 35,000 and was sold in 2019 for $40,000, this stock had been bought from, and was sold to, unrelated individuals. Lou has not sold a home during the last decade.

What amount of federal income tax do Lou and Marsha owe for 2019 (include AGI and taxable income totals for full credit)?

Expert Solution

ekkarill92 answered 2 years ago

Lou is 50, married and lives in Los Gatos. Lou sold his home early in 2019...

Lou is 50, married and lives in Los Gatos. Lou sold his home early in 2019 to his neighbor, Godiva, for $ 790,000. Lou’s wife, Marsha, also age 50, talked Lou into relocating to Locust Pennsylvania, and so, they sold the home the two of them lived in for all of 2016, 2017, and 2018. Lou alone owned the house, and received it as a gift from his sister Rae, in 2013. Rae had originally bought the house for $...

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