Problem:
After renting an apartment for five years, Todd and Diane purchased a new home on July 1, 2008. On their 2008 joint tax return, they claimed a $7,440 first-time home buyer credit.
Answer the following questions relating to the credit.
Question 1: Assuming they still live in the home, what amount of credit must Todd and Diane repay with their 2013 tax return?
Question 2: Assuming they sell the home in August 2013 for a $34,430 gain, what amount of credit must they pay back with their 2013 tax return?
Question 3: Assuming they sell the home in August 2013 for a $5,220 gain, what amount of credit must they pay back with their 2013 tax return?
Note: Please show the work not just the answer.