In order to be eligible to exclude gain on the sale of a principal residence,the taxpayer must meet which of the following tests?

Question

Quizplus · Accepted Answer

To be eligible to exclude gain on the sale of a principal residence, the taxpayer must meet both the Use test and Ownership test. The Use test requires the taxpayer to have used the property as their principal residence for at least 2 out of the 5 years preceding the sale. The Ownership test requires the taxpayer to have owned the property for at least 2 out of the 5 years preceding the sale. Thus, choice E, which includes both Use and Ownership tests, is the best answer. The Rental test and Business use test are not relevant for this exclusion.

In Order to Be Eligible to Exclude Gain on the Sale