Question

Frank Beamer and his wife Louisa have owned and lived in their personal residence for 10 years. They purchased the home for $300,000. They sell the home for $900,000. How much of the gain is taxable? If a portion of the sale is taxable, calculate the tax liability

Answer 1

Solution to the above accounting question:

As we know,

Purchase value= $300,000

Sale value= $900,000

Capital gain= sale value - purchase value =$600,000

When both of them files the return jointly

Taxable Gain= $600,000 - $500,000 (exemption value) =$100,000

Tax liability= $100,000*15% =$15,000

When return is filed singly

Taxable gain= $600,000-$250,000=$350,000

Tax liability=$350,000*15%=$52,500