ExpertEasy1 markMultiple Choice
CPA · Question 60 · Area IV: Property Transactions
A taxpayer sells their principal residence for a $600,000 gain. They are single and have lived there for 5 years. What is the taxable gain?
A taxpayer sells their principal residence for a $600,000 gain. They are single and have lived there for 5 years. What is the taxable gain?
Answer options:
A.
$600,000
B.
$100,000
C.
$350,000
D.
$0
How to approach this question
Section 121 Exclusion: Single = $250k. MFJ = $500k. <br/>Gain $600k - Exclusion $250k = $350k.
Full Answer
C.$350,000✓ Correct
$350,000
IRC §121. A taxpayer can exclude up to $250,000 ($500,000 if MFJ) of gain on the sale of a principal residence if ownership and use tests are met.
Common mistakes
Using the MFJ limit for a single filer.
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