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:

Allowance Method

is an accounting technique that estimates and reports the likely amount of uncollectible accounts receivable as an allowance for doubtful accounts.

General Ledger Account

A comprehensive record containing all the financial transactions of a business.

Aging

A method used in accounting to categorize a company's accounts receivables according to the length of time an invoice has been outstanding.