This year, Barney and Betty sold their home (sales price $660,000; cost $180,000). All closing costs were paid by the buyer. Barney and Betty owned and lived in their home for 18 months. Assuming no unusual or hardship circumstances apply, how much of the gain is included in gross income

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Business

Gypsy

13 October, 06:59

This year, Barney and Betty sold their home (sales price $660,000; cost $180,000). All closing costs were paid by the buyer. Barney and Betty owned and lived in their home for 18 months. Assuming no unusual or hardship circumstances apply, how much of the gain is included in gross income

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Sable · Answer 1

The whole of the $480,000 gained

Explanation:

Barney and Betty are selling their home for $660,000 and the cost incurred is $180,000. Their net profit is 660,000-180,000 = $480,000.

However Barney and Beth have lived in the house for 18 months, they have not stated for up to two years, so they do not meet the two year ownership and use test.

All of the gain on the sale will be included as gross income. That is the whole $480,000 gained.