Chapter 12 Fall 11 with solutions

# Chapter 12 Fall 11 with solutions - Burkett Tax I Chapter...

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Burkett – Tax I – Chapter 12 Sale of Principal Residence/Gain Exclusion Charlie, a single taxpayer sells his home on 08/01 realizing a gain of \$300,000. He has owned and used his home as his principal residence for at least 2 of the past 5 years. How much gain must he recognize? Gain realized \$ 300k Excluded gain (250k) Gain recognized \$ 50k (LTCG) What if Charlie had realized a \$20K loss? Personal use asset – loss not recognized Assume instead that Charlie has used his home as his principal residence for 584 days (1.6 years) of the last 5 years, the reason for the sale is an employment related move and his most recent sale was 3 years ago. Gain realized \$ 300k Excluded gain 584/730 x 250k (200k) Gain recognized \$ 100k (LTCG) 1

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Burkett – Tax I – Chapter 12 Sale of Principal Residence/Gain Exclusion w/ Non Qualified Use Example 1: Assume that an individual buys a property on January 1, 2009, for \$400,000, and uses it as rental property for two years claiming \$20,000 of depreciation deductions. On January 1, 2011, the taxpayer converts the property to
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Chapter 12 Fall 11 with solutions - Burkett Tax I Chapter...

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