Section 121 Exclusion. P and Q, who are married, sold their residence of 19 years on February 12, 2018. The house had cost $120,000 and improvements of $22,000 had been made. The house sold for $750,000. Selling costs of $37,500 were incurred and deferred maintenance costs of $4,500 were paid weeks before the sale. P and Q have taxable income not including this gain of $70,000 on their joint return for the year. a. How much is P and Qs gain realized on this sale? b. How much of that gain, if any, must be recognized? How will it be taxed? Section 121 Exclusion. P and Q, who are married, sold their residence of 19 years on February 12, 2018. The house had cost $120,000 and improvements of $22,000 had been made. The house sold for $750,000. Selling costs of $37,500 were incurred and deferred maintenance costs of $4,500 were paid weeks before the sale. P and Q have taxable income not including this gain of $70,000 on their joint return for the year. a. How much is P and Qs gain realized on this sale? b. How much of that gain, if any, must be recognized? How will it be taxed