Gary purchased a home for $125,000 on September 15, 2015 and Gary and Gerda moved in on that day. On October 7, 2016, they were divorced, and as part of the divorce agreement, the home was transferred to Gertrude who sold the home on August 18, 2017 for $350,000. How much can Gertrude exclude from her gross income?

a. $350,000.

b. $250,000.

c. $225,000.

d. $0.

e. None of the above

. Assume instead that in the preceding problem, as part of the divorce agreement, Gary retained ownership of the residence but the use of the home was granted to Gertrude as long as Gary owns the residence. If Gary sold the residence on August 18, 2014 for $350,000, how much can Gary exclude on his 2014 Form 1040?

a. $350,000.

b. $250,000.

c. $225,000.

d. $0.

e. None of the above.