Ms. Annalisa Philson has been married to Spiro Philson for over 10 years. While Annalisa is 32,

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Ms. Annalisa Philson has been married to Spiro Philson for over 10 years. While Annalisa is 32, her husband is 75 and has been in poor health for a number of years. They live in a home in Ottawa which Spiro purchased as a wedding gift for her in 2007 for $628,000. Annalisa is the sole owner of this property.

On a 2009 business trip to Calgary, Annalisa met Arnold Schwarz, a fitness trainer at the hotel where she stayed. The attraction was immediate and mutual and Annalisa has traveled regularly to Calgary to spend time with Arnold since then. In 2010, Annalisa purchased a condo in downtown Calgary for $325,000 and gave Arnold a key. In every year since its purchase, she has spent considerable time with Arnold in this property.

The year 2018 turned out to be an Annus Horribilis for Annalisa. To begin, her husband obtained well documented proof of her infidelity after hiring a private investigator. As a result, he moved out of the Ottawa home and removed her from his will where she had been the sole beneficiary of his considerable estate.

To make matters worse, on her last visit to Calgary, Arnold informed her that, at 32, she was now too mature for his tastes and he made other living arrangements.

These events have left Annalisa determined to charge her lifestyle. She decided to sell both properties and move into a religious community that requires a vow of celibacy from all of its residents.

As Annalisa has spent time in each property during every year of ownership, either one can be designated as her principal residence for any given year of ownership.

Both properties are sold quickly in 2018, with the Ottawa home going for $724,000 and the Calgary condo selling for $415,000. The real estate fees on each sale are 4 percent of the sales price. After receiving the proceeds, Annalisa decides to go on one last trip to Cancun before starting her new life.

Required: Describe how the residences should be designated in order to accomplish Annalisa's goal. In addition, calculate the total amount of the gain that would arise under the designation that you have recommended.