Question

Calvin and Carolyn Coleman purchased a home in San Francisco, California, for $375,000 on October 1, 2014. Calvin obtained a job in Portland, Oregon, and on December 1, 2015, the Colemans sold their home in San Francisco for $800,000. How much of the gain must the Colemans recognize?

Answer 1

$133,333

Step-by-step explanation:

General exclusion available = 500,000

Pro-rated exclusion available for 14 months out of 24 months = 500,000 * 14/24 = $291,667

Realized gain = $800,000 - $375,000 = $425,000

Recognized gain = 425,000 - 291,667 = $133,333