A Taxpayer Whose Principal Residence Is Destroyed in a Fire

question 44

True/False

A taxpayer whose principal residence is destroyed in a fire can use both the § 121 (sale of residence gain exclusion) and the § 1033 (involuntary conversion postponement of gain) provisions.

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Definitions:

Face Value

The nominal value or dollar value printed on a bond, note, or other financial instrument, indicating the amount due at maturity.

Effective Annual Yield

Effective Annual Yield is the return on an investment for a one-year period, taking into account the effect of compounding interest.

Semi-Annually

Semi-annually refers to an event or action occurring twice a year, often used in the context of interest payments or reporting periods.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, factoring in its current price, interest payments, and maturity value.