Ron and Mary Carson sold for $370,000 in November of 2020 their residence that they had purchased in 2005 for $75,000. They made major capital improvements during their 11-year ownership totaling $68,000.

a. What is their excluded gain? How much must they recognize?

b. Suppose instead that the Carsons sold their home for $753,000. They moved into a smaller house costing $220,000. What is their excluded gain? How much must they recognize?

c. Assume instead that the Carsons resided in a very depressed neighborhood and the home was sold for only $85,000. How much gain or loss is recognized?