Which of the following statements regarding the tax treatment of a principal residence is NOT correct? A capital loss cannot be realized on the sale of a principal residence

Taxation Dec 17, 2020

Which of the following statements regarding the tax treatment of a principal residence is NOT correct?

 

		
A capital loss cannot be realized on the sale of a principal residence.

		
If a taxpayer owns two residences, the decision to designate a particular property as the principal residence must be made when the residence is sold.



		
If a taxpayer owns only one residence, the principal residence formula will eliminate any capital gain on the sale.



		
If a taxpayer owns two residences, and both are sold in the same year, the principal residence formula will eliminate the capital gain on only one of the residences.

Expert Solution

If a taxpayer owns two residences, the decision to designate a particular property as the principal residence must be made when the residence is sold.

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