To Be Allowed to Exclude Gain on the Sale of a Principal

question 13

True/False

To be allowed to exclude gain on the sale of a principal residence, the taxpayer selling the home must be using the home as a principal residence at the time of the sale.

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Definitions:

Available-For-Sale Securities

Debt or equity securities not classified as held-to-maturity or trading securities, measured at fair value with changes recognized in other comprehensive income.

Realized Gain

is the profit made from selling an asset at a higher price than its purchase cost, officially recognized once the transaction is completed.

Fair Value

The value obtained for disposing of an asset or incurred in transferring a liability during a regulated deal among market entities on the date of measurement.

Net Income

The amount of profit left after all operating expenses, taxes, and interest are paid, indicating a company's financial performance over a specific period.