Nicki Is Single and 46 Years Old

question 45

Essay

Nicki is single and 46 years old.She sells her principal residence (adjusted basis $200,000)that she purchased ten years ago for $435,000.
a.What is the amount of Nicki's recognized gain on the sale?
b.Assume instead that Nicki sells the residence for $485,000.What is the amount of Nicki's recognized gain on the sale?
c.Assume instead that Nicki has been married to Mike for the entire time they have owned and lived in the home.If they sell the home for $485,000,what is the amount of their recognized gain on the sale?

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Definitions:

Stock Price

The cost of purchasing a share of a company's stock, determined by supply and demand in the market.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to purchase an asset at a specified price within a certain time frame.

Market Price

The market value at which a service or asset is currently traded.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a specified quantity of an asset at a set price within a specified time.