Which of the Following Rules Regarding the Tax Treatment of a Principal

question 8

Multiple Choice

Which of the following rules regarding the tax treatment of a principal residence is FALSE?

• A)If a taxpayer sells the only home they have ever owned for a gain, the capital gain on the sale is nil.
• B)When a taxpayer owns more than one residence, the decision to designate a particular property as the 'principal residence' occurs at the time of sale.
• C)Properties can be designated to each married or common-law partner in a family for the purpose of reducing the gains on the sale of two principal residences.
• D)A capital loss cannot be realized on the sale of a principal residence.

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Definitions:

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Optimal Level

The most favorable or advantageous degree of intensity or concentration for a specific function or activity.

Transference

A phenomenon in psychoanalysis where patients project feelings, attitudes, or desires onto their therapist, confusing the therapist with figures from their past.

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An enzyme responsible for breaking down neurotransmitters such as dopamine, norepinephrine, and serotonin in the brain.