My client sold his home in California at a loss. His company reimbursed him for the loss and included it in his W2 income for 2020. He owned the house for less than 2 years so he is not eligible for home sale gain exclusion. Does the reimbursement create a gain at Fed or State level? My inclination is no as he is already being taxed on the reimbursement when it was included in his W2 income.