Steve and Stephanie Allen purchased a home in Spokane, Washington, for $547,500. 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 $882,500

Find the recognized gain for the following.

a. What amount of gain on the sale of the home are the Allens required to include in taxable income?

b. Assume the original facts, except that Steve and Stephanie live in the home until January 1 of year 3, when they purchase a new home and rent out the original home. They finally sell the original home on June 30 of year 5 for $882,500. Ignoring any issues relating to depreciation taken on the home while it is being rented, what amount of realized gain on the sale of the home are the Allen required to include in taxable income?

c. Assume the same facts as in part (b), except that the Allens live in the home until January of year 4, when they purchase a new home and rent out the first home. What amount of realized gain on the sale of the home will the Allens include in taxable income if they sell the first home on June 30 of year 5 for $882,500?

d. Assume the original facts, except that Stephanie moves in with Steve on March 1 of year 3 and the couple is married on March 1 of year 4. Under state law, the couple jointly owns Steves 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 Steve. She excludes the entire $85,000 gain on the sale on her individual year 3 tax return. What amount of gain must the Allens recognize on the sale in June of year 5?