What amount of gain on the sale of the home

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Question - Steve and Stephanie Pratt purchased a home in Spokane, Washington, for $400,000. They moved into the home on February 1 of year 1. They lived in the home as their primary residence until June 30 of year 5, when they sold the home for $700,000. (Leave no answer blank. Enter zero if applicable.)

a. What amount of gain on the sale of the home are the Pratts required to include in taxable income?

b. Assume the original facts, except that Steve and Stephanie lived in the home until January 1 of year 3 when they purchased a new home and rented out the original home. They finally sell the original home on June 30 of year 5 for $700,000. Ignoring any issues relating to depreciation taken on the home while it was being rented, what amount of realized gain on the sale of the home are the Pratts required to include in taxable income?

c. Assume the same facts as in part (b), except that the Pratts lived in the home until January of year 4 when they purchased a new home and rented out the first home. What amount of realized gain on the sale of the home will the Pratts include in taxable income if they sell the first home on June 30 of year 5 for $700,000?

Reference no: EM131640220

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