Example 1: A, a single filer, has $450,000 in AGI for tax year 2018 before taking into account the sale of his principal residence that he has owned and resided in for the last 5 years. The sales price is $1,000,000. A’s cost basis in the home is $650,000.
a. What is A’s realized gain on the sale?
b. What is A’s recognized gain on the sale?
c. What is A’s capital gains tax on the sale?
d. What is A’s Net Investment Income Tax on the Sale?
Example 2: Same Facts as Example 1, except that A has $175,000 before taking into account the sale of his personal residence.