Steve and Stephanie Pratt purchased a home in Spokane, Washington, for $400,000. They moved into...
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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. (Leave no answer blank. Enter zero if applicable.)
a-1. Assume that the Pratts sold their home and moved because they did not 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?
b. Assume the Pratts sell the home because Stephanies employer transfers her to an office in Utah. How much gain will the Pratts recognize on their home sale?
c. Assume the same facts as in part (b), except that the Pratts sell their home for $700,000. How much gain will the Pratts recognize on the home sale? (Do not round intermediate calculations.)
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