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Problem 1: Michael (single) purchased his home on July 1, 2008. He lived in the home as his principal residence until July 1, 2016 when he moved out of the home and rented it out until July 1, 2017 when he moved back into the home. On July 1, 2018 he sold the home and realized a $327,500 gain. What amount of the gain is Michael allowed to exclude from his 2018 gross income?
Option 1: $0. Option 2: $225,000. Option 3: $250,000. Option 4: $327,500.
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