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:

Abortion

The termination of a pregnancy before the fetus is capable of independent life.

Congenital Impairments

Physical or cognitive disabilities present at birth, which can result from genetic factors, pregnancy complications, or infections during pregnancy.

Inherited

A trait or property passed down from one generation to another through genetic transmission or legal succession.

Identity Politics

A political approach and analytical framework that considers the interests and perspectives of groups identified or marginalized based on societal categories like race, gender, sexuality, etc.