Nicki is single and 46 years old. She sells her principal residence (adjusted ba

Question

Nicki is single and 46 years old. She sells her principal residence (adjusted basis $100,000) that she purchased five years ago for $435,000.

What is the amount of Nicki’s recognized gain on the sale?

Assume instead that Nicki sells the residence for $445,000.   What is the amount of Nicki’s recognized gain on the sale?

Assume instead that Nicki has been married to Mike for the entire time they have owned and lived in the home. If they sell the home for $585,000, what is the amount of their recognized gain on the sale?

Explanation / Answer

Since the residence is used for more than 36 months which is 3 years the residence sold will form part of long term capital gain and therefore the gain amount would be 445000-435000 = 10,000

If they would have sold at 585000 even if nicki married to mike still the reveneue would be or long term capital gain would be = 585000-435000 = 1,50,000

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