25 May Question 1. Wyatt sells his principal residence in December 2014 an
Question
1. Wyatt sells his principal residence in December 2014 and qualifies for the § 121 exclusion. He sells another principal residence in November 2015. Under no circumstance can Wyatt qualify for the § 121 exclusion on the sale of the second residence.
a. True
b. False
2. Taxpayer owns a home in Atlanta. His company transfers him to Chicago on January 2, 2014, and he sells the Atlanta house in early February 2014. He purchases a residence in Chicago on February 3, 2014. On December 15, 2014, taxpayer’s company transfers him to Los Angeles. In January 2015, he sells the Chicago residence and purchases a residence in Los Angeles. Because multiple sales have occurred within a twoyear period, § 121 treatment does notapply to the sale of the second home.
a. True
b. False
3. The maximum amount of the § 121 gain exclusion on sale of a principal residence is $250,000 for a single individual and $500,000 for a married couple.
a. True
b. False
4. Deidra has owned and occupied her principal residence for 10 years. Two and one-half years ago she married Doug who moved into her house. Doug has never owned a home. When Deidra is transferred to another city, she sells the house and has a realized gain of $425,000. Deidra can exclude the realized gain of $425,000 from her gross income under § 121 if she and Doug file a joint return.
a. True
b. False
5. Kitty, who is single, sells her principal residence, which she has owned and occupied for 8 years, for $375,000. The adjusted basis is $64,000 and selling expenses are $22,000. She purchases another principal residence three months later for $200,000. Her recognized gain is $39,000 and her basis for the new principal residence is $200,000.
a. True
b. False
6. Matt, who is single, sells his principal residence, which he has owned and occupied for 5 years, for $435,000. The adjusted basis is $140,000 and the selling expenses are $20,000. Three days after the sale he purchases another residence for $385,000. Matt’s recognized gain is $25,000 and his basis for the new residence is $385,000.
a. True
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