Agnes, a Calendar Year Taxpayer, Lists Her Principal Residence with a Realtor

question 68

Multiple Choice

Agnes, a calendar year taxpayer, lists her principal residence with a realtor on January 7, 2012, enters into a contract to sell on March 5, 2012, and sells (i.e., the closing date) the residence on May 15, 2012. The realized gain on the sale is $240,000. Which date is the appropriate ending date in determining if the residence has been owned and used by the taxpayer as the principal residence for at least two years during the prior five-year period?

• A)January 7, 2012.
• B)March 5, 2012.
• C)May 15, 2012.
• D)December 31, 2012.
• E)None of the above.

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Definitions:

Cash Discount

A reduction in the invoice price given by the seller to the buyer for quick payment within a specified period.

Merchandise

Products that a company buys to resell to its customers.

Cash Paid

The actual outflow of cash during a period for expenses, investments, and other financial activities.

Perpetual Inventory System

An inventory tracking system where updates are made continuously as transactions occur, providing real-time inventory levels.