During 2010,Ted and Judy,a Married Couple,decided to Sell Their Residence,which

question 121

Multiple Choice

During 2010,Ted and Judy,a married couple,decided to sell their residence,which had a basis of $225,000.They had owned and occupied the residence for 16 years.To make it more attractive to prospective buyers,they had the outside painted in April at a cost of $10,000 and paid for the work immediately.They sold the house in May for $795,000.Broker's commissions and other selling expenses amounted to $45,000.Since they both are age 68,they decide to rent an apartment.They purchase an annuity with the net proceeds from the sale.What is the recognized gain?

• A)$0.
• B)$15,000.
• C)$25,000.
• D)$525,000.
• E)None of the above.

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Definitions:

Average Price Level

A measure of the overall level of prices of goods and services in an economy over a period of time.

Imports and Exports

Transactions involving the buying (imports) and selling (exports) of goods and services between countries.

Interest Rate Effect

The impact that changing interest rates have on consumer spending and business investments in an economy, generally influencing economic activity.

Price Level

The mean value of prices for the full range of goods and services in the economy.