steven pratt, who is single, purchased a home in Spokane, Washington, for $525,000. he moved into...

steven pratt, who is single, purchased a home in Spokane, Washington, for $525,000. he moved into the home on February 1 of year 1. he lived in the home as his primary residence until june 30 of year 5, when he sold the home for $855,00. (leave no answer blank. enter zero if applicable. )

a. what amount of gain will steve be required to recognize on the sale of the home?
recognized gain on sale

b. assume the original facts, except that the home is Steve's vacation home and he vacations there four months each year. steve does not ever rent the home to others. what gain must steve recognize on the home sale?
recognized gain on sale

c. assume the original facts, except that steve married stephanie on February 1 of year 3 and the couple lived in the home until they sold it in june of year 5. under state law, steve owned the home by himself. how much gain must steve and stephanie recognize on the sale (assume they file a joint return in year 5).
recognized gain on sale

can you please help me and you type it out thank you

Solutions

Expert Solution

Part A
Steve pratt moved into his new house as his primary residence on Feb 1 of year 1 and stayed till june 30 of year 5. This makes his stay in his primary residence more than 2 years thus making him eligible for gain exclusion. Gain exclusion limit for single tax payer is $250000

Sales revenue	855000
Less :Purchase price	-525000
Gain to be realised	330000
Less: Gain exclusion available	-250000
Gain to be recognised	80000

Part B
Steve will recognise the whole gain as home is not his principal residence for 2 years in immediated 5 years before the sale of home.
Sales revenue	855000
Less :Purchase price	-525000
Gain to be realised	330000

Part C
Steve and stephanie got married on Feb 1 of year 3 and stayed till june of year 5 thus making them eligible for gain exclusion as the stay in their primary residence is more than 2 years. Gain exclusion limit for joint return is $500,000

Sales revenue	855000
Less :Purchase price	-525000
Gain to be realised	330000
Less: Gain exclusion available	-500000
Gain to be recognised	0

ekkarill92 answered 1 year ago

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