this year, fred and wilma, married filing jointly, sold their home (sales price $750,000, cost $200,000)…

this year, fred and wilma, married filing jointly, sold their home (sales price $750,000, cost $200,000). all closing costs were paid by the buyer. fred and wilma owned and lived in their home for the last 20 years. how much of the gain is included in gross income? multiple choice $550,000 $300,000 $250,000 $50,000 none of the choices are correct.

this year, fred and wilma, married filing jointly, sold their home (sales price $750,000, cost $200,000). all closing costs were paid by the buyer. fred and wilma owned and lived in their home for the last 20 years. how much of the gain is included in gross income? multiple choice $550,000 $300,000 $250,000 $50,000 none of the choices are correct.

Answer

Explanation:

Step1: Calculate the gain on the home sale

The gain on the sale of the home is calculated as the sales price minus the cost. So, the gain $G = 750000 - 200000=$550000$.

Step2: Apply home - sale exclusion rules

For married - filing - jointly taxpayers, they can exclude up to $500000$ of the gain on the sale of their principal residence if they meet the ownership and use tests (which Fred and Wilma do as they owned and lived in the home for the last 20 years).

Step3: Determine the gain included in gross income

The gain included in gross income is the total gain minus the exclusion amount. So, $550000 - 500000=$50000$.

Answer:

D. $50,000