Which of the Following Statements Regarding Home-Related Transactions Is Correct

question 31

Multiple Choice

Which of the following statements regarding home-related transactions is correct?

• A) If a taxpayer converts a home from personal use to rental use, the basis of the rental property is the greater of the basis of the property at the time of the conversion or the fair market value of the property at the time of the conversion.
• B) If a taxpayer uses a residence as a rental property (and deducts depreciation expense against the basis of the property) and as a personal residence the taxpayer will not be allowed to exclude the entire amount of gain even if the taxpayer otherwise meets the ownership and use tests and the amount of the gain is less than the limit on excludable gain.
• C) If a taxpayer converts a rental home to a principal residence, the taxpayer's basis in the principal residence is the greater of the basis of the home at the time of the conversion or the fair market value at the time of the conversion.
• D) None of these statements is correct.

---

Definitions:

Counterfeit Goods

Illegally produced replicas of real products, designed to deceive consumers by mimicking the appearance of genuine items without authorization.

License

In the context of intellectual property, a contract permitting the use of a trademark, copyright, patent, or trade secret for certain purposes. In the context of real property, a revocable right or privilege of a person to come on another person’s land.

Patented Fuel-Injection System

A legally protected innovation in the method or device for injecting fuel into an internal combustion engine.

Trademark Infringement

The unauthorized use of a trademark or service mark on competing or related goods and services, potentially confusing consumers.