Amos Sells His Principal Residence,which Has an Adjusted Basis of $100,000

question 87

Multiple Choice

Amos sells his principal residence,which has an adjusted basis of $100,000 for $150,000.He incurs selling expenses and legal fees of $6,000.He had purchased another residence one month prior to the sale for $140,000.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 $100,000.
• B)$0 and $140,000.
• C)$44,000 and $100,000.
• D)$44,000 and $140,000.
• E)None of the above.

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Definitions:

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used in hypothesis testing and estimation.

Large-Sample Significance

Refers to the level of significance or inferential reliability obtained when testing hypotheses with a large sample size, typically leading to more precise estimates.

Z Statistic

A type of standard score that indicates how many standard deviations an element is from the mean of the population.

Relative Risk

A measure in epidemiology that compares the risk of a health event among one group with the risk among another group.