Question

Troy (single) purchased a home in Hopkinton, Massachusetts, on January 1, 2007, for $310,000. He sold the home on January 1, 2018, for $330,200. How much gain must Troy recognize on his home sale in each of the following alternative situations? (Leave no answer blank. Enter zero if applicable.)

d. Troy rented out the home from January 1, 2007, through December 31, 2013. He lived in the home as his principal residence from January 1, 2014, through December 31, 2014. He rented out the home from January 1, 2015, through December 31, 2015, and lived in the home as his principal residence from January 1, 2016, through the date of the sale. Assume accumulated depreciation on the home at the time of sale was $0. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

Recognized gain ?

Answer 1

ANSWER:-

Explanation:-

As per internal revenue code section 121, a single filing a joint return can claim a maximum of $250,000 home sale exclusion.

If he or she had owned and used the property for two years out of the last five years.

In this case,

Step.01: Realized gain (330,200-310,000) = $ 20,200

Step.02: Total use in years (2017-2007) 10 years

Troy Qualify for 2 of last 5 years use test as principle home, actually lived 3 years out of 5.

But Rest 5 out 7 years are disqualified period (after Dec.31,2008, per rule) 5 years

Disqualified Ratio of gain : (5/10) = 0.500000

Therefore,

Gain recognized = (20,200*0.50) = 1010