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

question 33

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 are correct.

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Definitions:

Comparative Negligence

A legal doctrine used to allocate damages when both parties are at fault, based on the degree of each party's negligence.

Apportions Damages

The process of dividing up and assigning responsibility for monetary compensation among different parties in a legal case.

Degree of Fault

The level of responsibility or negligence attributed to each party involved in a legal matter or accident.

Strict Liability

A legal doctrine that holds individuals or entities liable for damages and harm caused by their actions, regardless of fault or intention.