On December 30, 2023, John sold his primary residence after living there since October 2013. John received the Form 1099-S from the sale (see separate tab). John paid selling expenses of $35,755. His basis in the home was $292,000. John paid the property taxes on the home for the second half of 2023 of $6,000. The closing statement for the sale indicated that the buyer needed to reimburse John for property taxes of $33.33, which were reflected as an increase in John's gross proceeds.

When John sells his primary residence, he may be eligible for the home sale exclusion, which allows him to exclude up to $250,000 of gain from his income if he is single, or $500,000 if married filing jointly, provided he meets the ownership and use tests. Since John lived in the home from October 2013 to December 2023, he meets these tests. To determine if John has a taxable gain, we need to calculate the gain from the sale: 1. **Gross Proceeds from Sale**: This is the amount reported on Form 1099-S. Let's assume this amount is $X. 2. **Adjustments to Gross Proceeds**: - Add the property tax reimbursement from the buyer: $33.33. 3. **Selling Expenses**: Subtract the selling expenses: $35,755. 4. **Adjusted Basis**: John's basis in the home is $292,000. 5. **Gain Calculation**: - Adjusted Gross Proceeds = $X + $33.33 - Gain = (Adjusted Gross Proceeds - Selling Expenses) - Adjusted Basis - Gain = (($X + $33.33) - $35,755) - $292,000 6. **Exclusion**: If the calculated gain is less than $250,000, John can exclude the entire gain from his taxable income. 7. **Property Taxes**: The $6,000 property

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