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Tom [10]
3 years ago
15

Eric and Katie, who are married, jointly own a house in which they have resided for the past 17 years. They sell the house for $

375,000 with realtor's fees of $10,000. Their adjusted basis for the house is $80,000. Since they are in their retirement years, they plan on moving around the country and renting. What is their recognized gain on the sale of the residence if they use the § 121 exclusion (exclusion of gain on sale of principal residence) and if they elect to forgo the § 121 exclusion?With Exclusion, Elect to Forgo
A) $0 $0
B) $35,000 $35,000
C) $0 $285,000
D) $35,000 $285,000
E) $285,000 $225,000
F) $0 $285,000
Business
1 answer:
Elodia [21]3 years ago
8 0

Answer:

C) $0 $285,000

Explanation:

The §121 exclusion establishes that homeowners can exclude from their capital gains taxes the sale of their property for a maximum of $250,000 gain (or $500,000 for joint filers) if they meet two criteria:

  • they owned the property for at last 5 years
  • they use the property as main residence for at least 2 years (they can aggregate time periods).

So if Eric and Katie use the §121 exclusion they wouldn't pay any capital gains tax ($500,000 is higher than $375,000).

If they decide to forgo the §121 exclusion, then they will have to pay taxes for a gain of:

capital gain = net sale price - asst basis

capital gain = ($375,000 - $10,000) - $80,000 = $365,000 - $80,000 = $285,000

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The correct answer is B,false

Explanation:

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Obviously,the opportunity cost of the bouffe to Betty is the practicing calculus problems for her math examination that she could not partake in.

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3 0
3 years ago
Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price flo
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Answer:

$3

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Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.

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Below equilibrium price there is a shortage - quantity demanded exceeds quantity supplied

Shortage = $12 - $9 = $3

5 0
3 years ago
One year ago, you purchased a stock at a price of $32.50. The stock pays quarterly dividends of $.40 per share. Today, the stock
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Answer:

The total dollar return per share is 11% or $3.7

Explanation:

Total dollar return = (Selling price- buying price + total dividend)/buying price.

The buying price is 32.50

The selling price= 34.60

The total dividends are 0.4*4=1.6 because in 1 year there will be 4 quarterly dividends.

Now we input these numbers in a formula

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4 years ago
Michael (single) purchased his home on July 1, 2009. He lived in the home as his principal residence until July 1, 2017 when he
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Answer:

correct option is C. $250,000

Explanation:

given data

sold the home and gain = $300,000

to find out

amount of the gain allowed to exclude from gross income

solution

we know that Michael owned the property for the 10 years

so here Michael is not allowed to exclude the gain = 10 % that is $30,000

and The maximum gain exclusion permitted =  $250000

so here Michael will recognize $50,000 because amount exceed $250,000 for a single taxpayer and exclusion of gain on sales of property tax payer need to own and occupy the property as principle residence for the  2 out of 5 year immediately preceding the sales

so here correct option is C. $250,000

5 0
4 years ago
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