Steve Pratt, who is single, purchased a home in Spokane, Washington, for $410,000. He moved into the home on February 1 of year 1. He lived in the home as his primary residence until June 30 of year 5, when he sold the home for $822,500. (Leave no answer blank. Enter zero if applicable.)

1) What amount of gain will Steve be required to recognize on the sale of the home?

2) Assume the original facts, except that the home is Steves vacation home and he vacations there four months each year. Steve does not ever rent the home to others. What gain must Steve recognize on the home sale?