I:12-51 Sale of a Principal Residence. Ray and Ellie have each owned a principal residence used for more than five years. Ray’s residence has an adjusted basis of $100,000 and a FMV of $325,000, while Ellie’s residence has an adjusted basis of $300,000 and a FMV of

$490,000. They plan to marry and will purchase another house.

a. Should they sell their houses before the marriage in order to minimize their taxes?

b. Will your answer to Part a change if the FMV of Ellie’s house is $690,000?

c. In Part

b, what tax strategy should Ray and Ellie consider?