Final answer:
Ethan can exclude the entire gain of $210,000 from his 2018 gross income because he meets the two-out-of-five-year residency requirement for the home sale exclusion under United States tax law.
Step-by-step explanation:
The student has asked about the amount of gain Ethan is allowed to exclude from his 2018 gross income after selling his home. Under the United States tax law, specifically the Section 121 exclusion, a homeowner may exclude up to $250,000 of gain from the sale of a primary residence ($500,000 for married couples filing jointly) if they have owned and lived in the home for at least two of the five years immediately preceding the sale. Ethan lived in the home as his principal residence from July 1, 2008, to July 1, 2015, and again from July 1, 2017, to July 1, 2018.
During the 5-year period ending on the date of the sale (from July 1, 2013, to July 1, 2018), Ethan used the home as his principal residence for exactly 2 years (July 1, 2013, to July 1, 2015, and July 1, 2017, to July 1, 2018). This satisfies the residency requirement. Considering that the gain is $210,000, which is less than the maximum exclusion amount, Ethan can exclude the entire gain from his taxable income, provided he meets all other requirements, such as not having excluded gain from the sale of another home during the two-year period prior to this sale. Therefore, the answer is $210,000.