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:

Advertisement

A public announcement in various media intended to attract interest or promote the sale of products or services.

Pique Technique

A strategy in social influence and compliance that involves making a request in an unusual manner to increase the likelihood of compliance by piquing interest.

Scarcity Principle

A psychological and economic principle stating that limited availability of a resource makes it more desirable and valuable.

Limited-number Technique

A marketing strategy that creates a sense of urgency by claiming a product is in short supply, urging quick consumer action.