Question

Michael and Mary Mason sold for $380,000.00 in March of 2019 their residence that they had purchased in 2004 for $75,000.00. They had made capital improvements during their 10-year ownership totaling $25,000.00.

1. What is their recognized gain should they elect to use Section 121? _
2. Suppose instead that the Masons sold their home for $720,000.00. They moved into a smaller house costing $220,000.00.
3.     What is their recognized gain should they elect to use Section 121?
4. Assume instead that the Masons resided in a very depressed neighborhood and the home was sold for only $60,000.00.      How much, if any, gain or loss is recognized?

Answer 1