Deidra Has Owned and Occupied Her Principal Residence for 10

question 81

True/False

Deidra has owned and occupied her principal residence for 10 years.Two and one-half years ago, she married Doug who moved into her house.Doug has never owned a home.When Deidra is transferred to another city, she sells the house and has a realized gain of $425,000.Deidra can exclude the realized gain of $425,000 from her gross income under § 121 if she and Doug file a joint return.

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Definitions:

Depreciation Tax Shield

The tax saving achieved by a company from deducting depreciation expenses on its taxable income.

Depreciation

The allocation of the cost of an asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Taxes

Mandatory financial charges or levies imposed by a government on individuals and organizations to fund public expenditures.

Profitability Index

A financial tool that calculates the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.