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@vijay_v wrote:

Is there any IRS publication that explicitly talks about this / states that the exclusion doesn't have to be "taken out" when computing AMT.


Forget any IRS publication. Section 121 expressly states that the home sale exclusion ($250,000/$500,00) is excluded from gross income.

 

(a) Exclusion

Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.