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:

Traumatic Events

Events that lead to psychological, physical, or emotional damage or suffering in a person.

Repression

A defense mechanism where distressing thoughts and memories are unconsciously blocked from conscious awareness.

Interference

Interference refers to the process by which the presence or action of one thing impedes or prevents the effectiveness of another, often used in the context of memory, waves, or signals.

Retrieval Cues

External or internal stimuli that help in accessing memories, making it easier to recall information.