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

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life.

Heavy Equipment

Larger, more specialized pieces of machinery used in construction, mining, and heavy industry, such as bulldozers, cranes, and excavators.

Sum-Of-The-Years-Digits

A depreciation method that results in a more accelerated write-off of assets than the straight-line method, involving adding the digits of the years of an asset's useful life.

Heavy Equipment

Large machinery used in construction, mining, and manufacturing, essential for executing large-scale tasks.