Carl Sells His Principal Residence, Which Has an Adjusted Basis

question 176

Multiple Choice

Carl sells his principal residence, which has an adjusted basis of $150,000 for $200,000. He incurs selling expenses of $20,000 and legal fees of $2,000. He had purchased another residence one month prior to the sale for $380,000. What is the recognized gain or loss and the basis of the replacement residence if the taxpayer elects to forgo the §121 exclusion (exclusion of gain on sale of principal residence) ?

• A) $0 and $380,000.
• B) $0 and $408,000.
• C) $28,000 and $352,000.
• D) $28,000 and $380,000.
• E) None of the above.

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Definitions:

Standard Deviation

A gauging of the extent of deviation or scattering among a group of figures.

Normal Population

A population distribution that follows a normal or Gaussian curve, with a symmetric shape centered around the mean, typical in many natural phenomena.

Confidence

In statistical inference, the degree of certainty or probability that a parameter lies within a specified range.

Population Mean

The average value of a set of characteristics in the entire population, calculated by summing all values and dividing by the number of observations in the population.