Ms. Imo, who is single, purchased her first home in 1991 for $85,000 and sold it in May 2000 for $178,500. She purchased her second home in July 2000 for $385,000 and sold it this year for $700,000. A. Compute Ms. Imo’s taxable gain on the 2000 sale and on this year’s sale.
B. Compute the income tax and Medicare contribution tax on her gain this year if her preferential rate on long-term capital gain is 20 percent.