Which of the Following Statements Concerning the Exclusion Available Under

question 14

Multiple Choice

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

• A)This provision allows 50% of the gain from sale of any residence to be excluded from income.
• B)A vacation home used as a residence for at least five months of the year will qualify for this exclusion.
• C)It is possible for taxpayers to sell their home and qualify for this exclusion every two years.
• D)The gain on the sale can be deferred and rolled over into another residence instead of electing the exclusion.

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Definitions:

Interest

The cost of borrowing money or the payment received for the investment of money, typically expressed as a percentage of the principal.

Maturity Value

Maturity Value is the amount payable to an investor at the maturity date of a financial instrument, typically including the principal and the interest.

Note Receivable

A written promise to pay a specified amount, usually interest-bearing, that is recognized as an asset on the lender's balance sheet.

Promissory Notes

Written promises to pay a specified sum of money to a certain person or entity at a defined time or on demand.