Eric and Faye,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? $\quad$With exclusion$\quad$$\quad$Elect to forgo
a. $ \$ 0 \quad\quad\quad\quad\quad\quad\quad \$ 0 $
b.$\$ 35,000 \quad\quad\quad\quad \$ 35,000$
c.$\$ 0\quad\quad\quad\quad\quad\quad\$285,000$
d.$\$ 35,000\quad\quad\quad\quad\$285,000$
e.$ \$ 285,000 \quad\quad\quad\quad\$ 225,000 $

Question

Eric and Faye,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? $\quad$With exclusion$\quad$$\quad$Elect to forgo
a. $ \$ 0 \quad\quad\quad\quad\quad\quad\quad \$ 0 $
b.$\$ 35,000 \quad\quad\quad\quad \$ 35,000$
c.$\$ 0\quad\quad\quad\quad\quad\quad\$285,000$
d.$\$ 35,000\quad\quad\quad\quad\$285,000$
e.$ \$ 285,000  \quad\quad\quad\quad\$ 225,000 $

Quizplus · Accepted Answer

$\begin{array}{lr}
\text { Amount realized }(\$ 375,000-\$ 10,000) & \$ 365,000 \
\text { Adjusted basis } & (80,000) \
\text { Realized gain } & \$ 285,000 \
\S 121 \text { exclusion } & ( 285,000) \
\text { Recognized gain } & \$-0-
\end{array}$ The § 121 exclusion reduces the recognized gain by $285,000 to $0.Without the § 121 exclusion,the recognized gain is $285,000.

Eric and Faye,who Are Married,jointly Own a House in Which \quad

Eric and Faye,who Are Married,jointly Own a House in Which $\quad$