CHAPTEH SEVENSALE a lake Don was transferred to a new job lo

CHAPTEH SEVENSALE a lake. Don was transferred to a new job location 300 miles away. He had owned both the condominium and the houseboat for more than two out of the last five years. He had regularly lived in the condominium for seven months each year and on th gain of $200,000 in Year One. Don also sold the houseboat in Year One and realized a $100,000 gain. What is the maximum gain that Don can exclude from income tax? 107. Don, who is single, owned a condominium in the city and a houseboat anchored on e houseboat five months each year. Don sold the condominium and realized a a. $100,000 b. $200,000 c. $250,000 d. $300,000 108. Which one of the following is correct in regard to taking the exclusion of gain on the sale of your home? a. You can take only a part of the eligible exclusion and include the remainder in income. b. You can choose not to take the exclusion. c. You must meet the use test but not the ownership test d. You must meet the ownership test but not the use test. 109. What is the maximum allowable exclusion of gain a head of household filer taxpayer can take on a sale of a residence? a. $50,000 b. $100,000 c. $250,000 d. $500,000 110. Under some circumstances, you can claim a reduced amount of exclusion of the gain on the sale of the home. Which one of the following statements is correct in this regard? a. You did not meet the ownership and use tests due to a change in your b. You did not meet the ownership and use tests due to health reasons. place of employment. c. You did not meet the ownership and use tests due to certain unforeseen circumstances. d. All of the above are correct 24

Solution

107. B. 2,00,000$ Don is single, and he passes the ownership test and use of residence test, he has used the house as his primary residence and lived for two years in the past 5 years. So the maximum amount of exclusion is 2,50,000$ . He can claim it only on one primary residence ata time. So it\'s better to claim for the house.

108. A. You can take only a part of eligible exclusion and include the remaining in your income under special circumstances which are change of residence due to employment, health reasons etc.

109. C. 2,50,000$ is the maximum allowable exclusion of gain if filed as single, if married and filed jointly the limit is 5,00,000$.

110. D. All of the above.