Leticia and Stephanie Sims purchased a home in Spokane, Washington, for $$425,000.$ They moved into the home on February $1$ of year $1.$ They lived in the home as their primary residence until June $30$ of year $5,$ when they sold the home for $$715,000.$

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Problem $14-39$ Part d $($Algo$)$

d$.$ Assume the original facts, except that Stephanie moves in with Leticia on March $1$ of year $3$ and the couple is married on March $1$ of year $4.$ Under state law, the couple jointly owns Leticia's home beginning on the date they are married. On December $1$ of year $3,$ Stephanie sells her home that she lived in before she moved in with Leticia. She excludes the entire $$40,000$ gain on the sale on her individual year $3$ tax return. What amount of gain must the couple recognize on the sale in June of year $5?$

Recognized gain