Adam and Tori got married and bought a house 15 months ago. Tori’s job recently transferred her to an office in a different state, so Adam and Tori sold their house. What is the maximum amount of gain from the sale of the personal residence that Adam and Tori can exclude from income taxation?
| $0 |
| $250,000. |
| $312,500. |
| $500,000. |
(a) $0
| Complete this section only if you have determined that you aren’t eligible for the maximum exclusion but are eligible for a partial exclusion. If you are eligible for a partial exclusion, use this section to determine your exclusion limit. | |||||||||
| Step 1 | Determine the shortest of the following 3 periods: | ||||||||
| 1. Your time of residence in the home during the 5-year period leading up to the sale | |||||||||
| 2. Your time of ownership of the home leading up to the sale | |||||||||
| 3. The time that has elapsed between the sale and the date you last sold a home for which you took the exclusion | |||||||||
| Step 2 | Take the smallest period from Step 1 (you may use days or months) and divide that number by 730 (if using days) or 24 (if using months) | ||||||||
| Step 3 | Multiply the result from Step 2 by $250,000. Stop here if not married filing jointly | ||||||||
| Step 4 | Repeat Steps 1—3 for your spouse and add the two results | ||||||||
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