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:

Above-Equilibrium Wage

A wage rate higher than the market equilibrium wage, which can lead to unemployment due to the excess supply of labor.

Minimum-Wage Laws

Legislation that sets the lowest hourly rate that employers are allowed to pay their workers.

Unions

Organizations formed by workers from related sectors to negotiate collectively with employers over wages, benefits, and working conditions.

Efficiency Wages

Above-equilibrium wages paid by firms to increase worker productivity.