Mitchell and Debbie,both 55 Years Old and Married,sell Their Personal

question 81

Multiple Choice

Mitchell and Debbie,both 55 years old and married,sell their personal residence to Sophie.Sophie pays $225,000 and assumes their $70,000 mortgage.To make the sale they pay $4,000 in commissions and $1,000 in legal costs.They have owned and lived in the house for seven years and their tax basis is $125,000.What is the amount of gain recognized on the sale?

• A)$0
• B)$100,000
• C)$165,000
• D)$170,000

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Definitions:

Annual

Pertaining to something that happens every year or is calculated over a year's time.

Coupon Rate

An annual interest percentage paid by a bond, based on its face value.

Par Value

The face value of a bond or stock, representing the amount that will be paid back at maturity or the stated value upon which dividends are calculated.

Yield To Maturity

Yield to maturity is the total return anticipated on a bond if the bond is held until it matures, accounting for its current market price, face value, interest payments, and time to maturity.