This Year, Fred and Wilma, Married Filing Joint, Sold Their

question 39

Multiple Choice

This year, Fred and Wilma, married filing joint, sold their home (sales price $750,000; cost $200,000) . All closing costs were paid by the buyer. Fred and Wilma owned and lived in their home for 20 years. How much of the gain is included in gross income?

• A) $550,000
• B) $300,000
• C) $250,000
• D) $50,000
• E) None

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Definitions:

Income Tax Rate

The percentage at which individual or corporate income is taxed by the government, which can vary depending on the income level and jurisdiction.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, where the cost is evenly spread over its useful life.

Renovation Cost

The expenses associated with updating or refurbishing an existing structure or space to improve its appearance or functionality.

Initial Investments

The initial outlay of cash required to start a project or an investment, often including purchase of equipment and other startup costs.