Solution-How much of the million gain can be excluded

How much of the million gain can be excluded

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Question - Chuck and Barb have jointly owned their residence for the past twelve years. The basis in their home is $200,000 and its FMV is $1 million. Sadly, Chuck and Barb are divorcing. The divorce decree states they are to remain co-owners of the residence and Barb can live in the home until their youngest daughter reaches age 18 in five years. At that time the home is to be sold and the proceeds split equally between them.

Shortly after Chuck moved out, Steve moved in and during that same year, Barb and Steve got married. Four years later, as per the divorce decree, the home sold for $1.2 million resulting in a $1 million gain.

How much of the $1 million gain can be excluded from income by Chuck, Barb and Steve?

Reference no: EM132076825

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How much of the million gain can be excluded

Reference no: EM132076825

Reference no: EM132076825

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