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How much gain will the Pratts recognize on their home sale

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Question - Steve and Stephanie Pratt purchased a home in Spokane, Washington, for $400,000. They moved into the home on February 1 of year 1. They lived in the home as their primary residence until November 1 of year 1, when they sold the home for $500,000. The Pratts' marginal ordinary tax rate is 35 percent.

a-1. Assume that the Pratts sold their home and moved because they didn't like their neighbors. How much gain will the Pratts recognize on their home sale?

a-2. At what rate, if any, will the gain be taxed?

Reference no: EM132569713

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