Smith, a college student, purchased a condo for $150,000 at the beginning of college. He lived there
Question:
Smith, a college student, purchased a condo for $150,000 at the beginning of college. He lived there as her principal residence for 3 years, with the intent of remaining in the same city after graduation. However, he must relocate because he received a job. She listed the condo for sale around the time of graduation in May for the fair market value of $175,000. However, she did not receive any offers. By July, stressed out about exams, he decided to take the condo off the market and offer it for rent. He posted the condo on Craigslist to try to rent it out but he could not find suitable tenants. After several months on Craigslist he relisted the condo and sold it. (Use U.S. IRC)
(a) Assume Smith sold the condo for $200,000. What must Smith report on his taxes for that year?
(b) Assume the real estate market declined and Smith was only able to sell the condo for $125,000. What loss if any could Smith claim on his tax return?
(c) Assume instead that Smith condo was destroyed in a fire. His insurance company paid her $100,000. What amount if any can Smith claim as a loss?
South Western Federal Taxation 2017 Comprehensive
ISBN: 9781305874169
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young