On November 1, year 1, Jamie (who is single) purchased and moved into Jamie's principal residence. In the early part of year 2, Jamie was laid off from her job. On February 1, year 2, Jamie sold the home at a $42,500 gain. Jamie sold the home because Jamie found a new job in a different state. How much gain, if any, may Jamie exclude from gross income in year 2?

$0

$4,250

$31,250

$42,500