Answer:
To determine the minimum taxable capital gain that Ms. Jennie Smith must report on the 2019 sale of her house, we need to consider the principal residence exemption. The principal residence exemption allows homeowners to exclude the gain on the sale of their primary residence from their taxable income.
In this case, Ms. Smith owned the house for a total of 16 years (2003 to 2019). However, she only designated it as her principal residence for 7 years. This means that for the remaining 9 years, the house was not considered her principal residence.
To calculate the taxable capital gain, we need to determine the increase in the value of the house during the non-exempt period. In this case, we can subtract the original purchase price of $107,000 from the sale price of $210,000 to find the total gain: $210,000 - $107,000 = $103,000.
Next, we need to prorate this gain based on the ratio of the non-exempt period to the total ownership period. In this case, the non-exempt period is 9 years and the total ownership period is 16 years. So, the prorated gain is calculated as follows: ($103,000 * 9) / 16 = $57,937.50.
Finally, the minimum taxable capital gain that Ms. Smith must report on the 2019 sale of her house, after considering the principal residence exemption, is $57,937.50.
It's important to note that tax laws and exemptions can vary by jurisdiction, so it's always a good idea to consult with a tax professional or refer to the specific tax regulations in your area for accurate and up-to-date information.