Eric and Katie, Who Are Married, Jointly Own a House

Short Answer

Eric and Katie, who are married, jointly own a house in which they have resided for the past 17 years.They sell the house for $375,000 with realtor's fees of $10,000.Their adjusted basis for the house is $80,000.Since they are in their retirement years, they plan on moving around the country and renting.What is their recognized gain on the sale of the residence if they use the § 121 exclusion (exclusion of gain on sale of principal residence) and if they elect to forgo the § 121 exclusion? $$\begin{array} { l l } \underline {\text { With Exclusion }} & \underline {\text { Elect to Forgo }} \\\text { a. } \$ 0 & \$ 0 \\\text { b. } \$ 35,000 & \$ 35,000 \\\text { c. } \$ 0 & \$ 285,000 \\\text { d. } \$ 35,000 & \$ 285,000 \\\text { e. } \$ 285,000 & \$ 225,000\end{array}$$