Eric and Faye,who Are Married,jointly Own a House in Which $\quad$

question 14

Short Answer

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? $\quad$ With exclusion $\quad$$\quad$ Elect to forgo
a. $\$ 0 \quad\quad\quad\quad\quad\quad\quad \$ 0$
b. $\$ 35,000 \quad\quad\quad\quad \$ 35,000$
c. $\$ 0\quad\quad\quad\quad\quad\quad\$285,000$
d. $\$ 35,000\quad\quad\quad\quad\$285,000$
e. $\$ 285,000 \quad\quad\quad\quad\$ 225,000$

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Definitions:

Payoffs

The returns or gains received from a particular action or investment, typically used in the context of games or economic theory.

Player A

In the context of game theory, a label for one of the participants in a strategic interaction or game.

Player B

In game theory, a participant in a strategic situation or game, distinguished from other participants by the label "B".

Sherman Antitrust Act

A landmark U.S. legislation passed in 1890 that prohibits monopolistic business practices and promotes competition.