3. Steve and Stephanie Pratt purchased a home in Spokane, Washington for $400,000. They moved into the home on February 1, of year 1. They lived in the home as their primary residence until October 1 of year 1 when they sold the home for $610,000. Assume the Pratts sell the home because Stephanies employer transfers her to an office in Utah. How much gain will the Pratts recognize on their home sale?

4. Sarah (single) purchased a home on January 1, 2008 for $600,000. She eventually sold the home for $790,000. Sarah used the property as a vacation home through December 31, 2014. She then used the home as her principal residence from January 1, 2015 until she sold it on January 1, 2017.What amount of the gain on the sale does Sarah recognize?