LO.4 Jill bought a house in April 2008 for $190,000. She lived in it until August 2010, when she moved to Mack’s new home. Mack and Jill got married and filed a joint return in 2011 and subsequent years. In January 2012, Jill sells her house for $350,000 (selling expenses are $17,500).

a. Do Mack and Jill qualify for the § 121 exclusion? What is the maximum amount of exclusion available on the sale of Jill’s house? What is her recognized gain?

b. On May 22, 2013, Mack and Jill sell Mack’s house for $625,000. Selling expenses are

$37,500, and Mack’s adjusted basis is $260,000. What is the maximum amount of the

§ 121 exclusion available on the sale of Mack’s home? What is the recognized gain?

c. Would the result in part

(b) change if Mack’s house is not sold until June 2014?

Explain.