1. Mary and Pete have lived in a home from 1973 to 2020. They purchased the home for $180,000 and sold it for $560,000. Assume the couple has not used a section 121 exclusion before. How much will their AGI increase from selling the house?

2. Ross and Rachel purchased a home in 2019. Sadly Rachel divorced Ross leaving Ross with the house. He can't really afford the house alone so he sells it in 2020 for $600,000. The house was Ross's primary residence for 292 days over the past 2 years. The basis is $325,000. Assume no prior 121 exclusion has been used. How much will Ross's AGI increase due to selling the house? Hint: use 730 days as a replacement for 24 months when calculating the exclusion.

3.

Joan owns and rents a cabin near a local ski resort. Her family used the cabin for 40 days and rents the cabin for 60 days. Joan does not qualify for active participation, and any losses will be limited by passive loss rules. It generates $13,000 of income. She has the following expenses (use 365 days for the year):

• Property Taxes $2,500
• Mortgage Interest $5,000
• Utilities $1,200
• Insurance $500
• Yard maintenance $1,500
• Depreciation if property was 100% business $14,000

What is her total deduction related to the rental property? Assume she does not want any expenses to be limited by passive loss rules. (Hint: I am looking for the sum of deductions, not the profit or loss. Just the amount of deductions that will be taken against the $13,000 rental income.)