Cameron (single) purchased and moved into his principal residence on July 1, yea

Question

Cameron (single) purchased and moved into his principal residence on July 1, year 1. On June 1, year 2, Cameron lost his job. Because he couldn't afford the payments on his new home, he sold it on July 1, year 2 in order to move into some apartments across the street. On the sale of his principal residence, Cameron realized a $50,000 gain. How much of the gain is Cameron allowed to exclude from his year 3 gross income?

$0.                                                                                                      

$2,500.

$25,000.

$50,000.

Harvey rents his second home. During the year, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income for the year?

$35,000.

$25,000.

$5,000.

$0.

Explanation / Answer

a) Cameron qualifies for the exclusion under the hardship provisions for a reduced exclusion, which entitels him to get the exlusion on full amount. So, option 4 is correct.

b) 25,000

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