a taxpayer who is single sells his condo in february 2012 he buys a new home weds in 612706

A taxpayer, who is single, sells his condo in February 2012. He buys a new home, weds in June 2012, and his new bride moves in at that time. Gain on the sale of his condo is $275,000. Assuming he owned and used the condo as his main home for two out of the last five years, he can:

a. Incorrect. It is correct that the taxpayer can exclude gain of $250,000, but it is not correct that he is free from reporting the balance of the gain.

b. Incorrect. The taxpayer could have excluded his entire gain of $275,000 only if his spouse had lived in the home for at least two years and had not claimed her own exclusion within that period.

c. Incorrect. Even though the taxpayer is married, the full $500,000 for joint filers does not apply in this case; in any event, gain is not $500,000.

d. Correct. Even though the taxpayer is married at the end of the year, the spouse did not live in the home for at least two years, so the maximum exclusion is $250,000; the balance of the gain ($25,000) is taxed as long-term capital gain.