If one spouse sells a home and excludes the gain on the sale,the gain on the sale of a residence by the other spouse is:

A) Never excluded.
B) Excluded up to $500,000.
C) Excluded up to $250,000.
D) Excluded up to $250,000 plus any gain exclusion not used by the first spouse.

Under U.S. tax law, if one spouse sells a home and excludes the gain on the sale, the other spouse can still exclude up to $250,000 of gain on the sale of their own residence, assuming they meet the eligibility criteria. The $500,000 exclusion applies to married couples filing jointly, but each spouse has their own $250,000 exclusion if filing separately or if the homes are sold at different times.