Question 10. 10. (TCO 11) If a married couple files a joint return, the $250,000

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Question 10. 10. (TCO 11) If a married couple files a joint return, the $250,000 amount is increased to $500,000 if _____. (Points : 2)

       either spouse meets the at-least-2-years ownership requirement.
       both spouses meet the at-least-2-years use requirement.
       neither spouse is ineligible for the Section 121 exclusion on the sale of the current principal residence because of the sale of another principal residence within the prior 2 years.
       All of the above
       None of the above

Question 10. 10. (TCO 11) If a married couple files a joint return, the $250,000 amount is increased to $500,000 if _____. (Points : 2)

Explanation / Answer

All of the above

if the realized gain does not exceed $250,000 there is not recognized gain amount realized = selling price – selling expenses repairs and maintenance performed by the seller are not treated as selling expenses or adjustments to the taxpayers adjusted basis a married couple filing a joint return, the exclusion amt is $500,000 if the following requirements are satisfied o either spouse meets the at-least-2-years ownership requirement o both spouses meet the at-least-2-years use requirement o neither spouse in ineligible for the 121 exclusion on the sale of the current principal residence because of the sale of another principal residence within the prior 2 years starting in 2008, a surviving spouse can continue to use the $500,000 exclusion amt on the sale of a personal residence for the next 2 years following the deceased spouse’s death o if the sale occurs in the year of death, a joint return must be filed by the surviving spouse if each spouse owns a qualified principal residence, each spouse can separately qualify for the $250,000 exclusion on the sale of his or her own residence even if the couple files a joint return section 121 partial exclusions—the 121 exclusion amt (250k or 500k) is multiplied by a fraction, the numerator is the number of qualifying months and the denominator is 24 months o the resulting amt is the excluded gain because section 121 is an exclusion provision and not a postponement of gain provision, the basis of a new residence is its cost a vacation home does not qualify for the section 121 exclusion because it does not satisfy the requirement of being the taxpayer’s principal residence o suppose, the taxpayer converts the vacation home into a principal residence and satisfies the at least 2 years ownership and use requirements prior to 2009, the converted vacation home qualified for the 121 exclusion

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