CPA Auditing and Attestation (AUD) - Federal Taxation of Property Transactions

An individual may exclude from income up to __________ of gain that is realized on the sale or exchange of a residence, if the individual owned and occupied the residence as a principle residence for an aggregate of at least __________ of the five years __________ the sale.

$\$250,000\textup{. . . two. . . preceding}$

CORRECT

$\$250,000\textup{. . . two. . . post}$

$\$500,000\textup{. . . two. . . post}$

$\$500,000\textup{. . . one. . . preceding}$

$\$350,000\textup{. . . two. . . preceding}$

Explanation

The following choice is the correct answer:

$\$250,000\textup{. . . two. . . preceding}$

This means that an individual may exclude from income up to two hundred and fifty thousand dollars of gain that is realized on the sale or exchange of a residence, if the individual owned and occupied the residence as a principle residence for an aggregate of at least two of the five years preceding the sale. The amount can be increased to five hundred thousand if married individuals file jointly. This applies if either spouse meets the ownership requirement and both spouses meet the use requirement.

Federal Taxation of Property Transactions

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