Eric and Faye, Who Are Married, Jointly Own a House

question 251

Multiple Choice

Eric and Faye, who are married, jointly own a house in which they have resided for the past 17 years. They sell the house for $375,000 with realtor's fees of $10,000. Their adjusted basis for the house is $80,000. Since they are in their retirement years, they plan on moving around the country and renting. What is their recognized gain on the sale of the residence if they use the § 121 exclusion (exclusion of gain on sale of principal residence) and if they elect to forgo the § 121 exclusion? With exclusion Elect to forgo

• A) $0 $0
• B) $35,000 $35,000
• C) $0 $285,000
• D) $35,000 $285,000
• E) $285,000 $225,000

---

Definitions:

Anticompetitive Conduct

Actions by businesses that harm competition, including monopolization, illegal mergers, and unfair trade practices.

Interstate Commerce Commission

A regulatory agency in the United States established in 1887 to regulate railroad prices and later expanded to oversee other modes of transportation.

Formal Rule Making

A type of rule-making that is used when legislation requires a formal hearing process with a complete transcript; consists of publication of the proposed rule in the Federal Register, a public hearing, publication of formal findings, and publication of the final rule if adopted.

Ambiguous

Being open to more than one interpretation, meaning, or outcome, often resulting in uncertainty or confusion.