missy, age 30, has owned her principal residence (adjusted basis of $225,000) for five years. during the first three years of ownership, she occupied it as her principal residence. during the past two years, she was in graduate school and rented the residence. after graduate school, missy returned to the same location where she previously worked. at this point, she purchased another residence for $400,000 and listed her old residence for sale at $340,000. due to a slow real estate market, 11 months later missy finally receives an offer of $330,000.