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while he was living in the nursing home his daughter acting under a power of attorne 612708

On February 1, 2010, Kevin, a single taxpayer, buys a condominium in North Dakota. On April 3, 2011, he suffers a stroke and, following hospitalization, is transferred to a nursing home. While he was living in the nursing home, his daughter, acting under a power of attorney, sells the condo in December 2012 for a gain of $48,000. How is the gain treated?

a. Correct. Because he became incapacitated after having owned and lived in the home for at least one year, he can count the time in the nursing home as part of this two-year ownership and use requirement. Therefore, he can fully exclude the gain.

b. Incorrect. While he did move because of health reasons, he does not have to figure a partial exclusion due to his move to the nursing home.

c. Incorrect. The time in the hospital is viewed as a temporary absence and does not impact the home sale exclusion.

d. Incorrect. The fact that he did not live in the home for the requisite two years does not make his gain fully taxable in this situation because of his move to a nursing home.

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