Steve Pratt, who is single, purchased a home in Spokane, Washington, for $410,000. He moved into the home on February 1 of year 1. He lived in the home as his primary residence until June 30 of year 5, when he sold the home for $822,500. 1) What amount of gain will Steve be required to recognize on the sale of the home? 2) Assume the original facts, except that the home is Steve's vacation home and he vacations there four months each year. Steve does not ever rent the home to others. What gain must Steve recognize on the home sale?
Steve Pratt, who is single, purchased a home in Spokane, Washington, for $410,000. He moved into the home on February 1 of year 1. He lived in the home as his primary residence until June 30 of year 5, when he sold the home for $822,500. 1) What amount of gain will Steve be required to recognize on the sale of the home? 2) Assume the original facts, except that the home is Steve's vacation home and he vacations there four months each year. Steve does not ever rent the home to others. What gain must Steve recognize on the home sale?
Chapter27: The Federal Gift And Estate Taxes
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Steve Pratt, who is single, purchased a home in Spokane,
Washington, for $410,000. He moved into the home on
February 1 of year 1. He lived in the home as his primary
residence until June 30 of year 5, when he sold the home
for $822,500.
1) What amount of gain will Steve be required to recognize
on the sale of the home?
2) Assume the original facts, except that the home is
Steve's vacation home and he vacations there four
months each year. Steve does not ever rent the home to
others. What gain must Steve recognize on the home
sale?
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