Essay
Michael and Mary Mason sold for $380,000 in November of 2012 their residence that they had purchased in 2002 for $75,000. ftey made major capital improvements during their 10-year ownership totaling $25,000.
(a.) What is their excluded gain? How much must they recognize?
(b.) Suppose instead that the Masons sold their home for $720,000. ftey moved into a smaller house costing
$220,000. What is their excluded gain? How much must they recognize?
(c.) Assume instead that the Masons resided in a very depressed neighborhood and the home was sold for only
$60,000. How much gain or loss is recognized?
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