On February 1, 2016 Stephen (Who Is Single) Sold His

question 87

Multiple Choice

On February 1, 2016 Stephen (who is single) sold his principal residence (home 1) at a $100,000 gain. He was able to exclude the entire gain on his 2016 tax return. Stephen purchased and moved into home 2 on the same day. Assuming Stephen lives in home 2 as his principal residence until he sells it, which of the following statements is true?

• A)Under no circumstance will Stephen be allowed to exclude gain on home 2 if he sells home 2 in 2017.
• B)Stephen will be eligible to exclude gain on home 2 only if he waits until 2021 to sell it.
• C)In certain circumstances, Stephen may be able to exclude gain on home 2 even if he sells home 2 in 2016.
• D)None of these is a true statement.

Recognize the treatment of accounts payable and receivable in various transactions.

Understand the recording and impact of owner's investments and withdrawals on capital.

Determine the source of information for transaction explanations and account credits in journal entries.

Comprehend the correct format and sequencing in journal entries and their importance in accounting records.

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