Question
You join with three friends from school and the four of you pool your cash and purchase for $225,000 a four-bedroom fixer-upper house. The closing
You join with three friends from school and the four of you pool your cash and purchase for $225,000 a four-bedroom fixer-upper house. The closing of your purchase was today. All four of your names are on the deed (legal title) to the house and your ownership interests are in proportion to amount of the pur-chase price each of you paid, as follows:
- Friend A = 10%
- Friend B = 25%
- Friend C = 30%
- You = 35%
All four of you move in today and will continue to live in the house for the next 2+ years while fixing it up.
Now leap forward in time to November 1, 2023, when the four of you sell the house for $675,000. What dollar amount of gain will you (yourself) recognize (include in gross income) on your 2023 Form 1040, and why is that the correct amount?
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