Corrine sold her home a few years ago in a seller financed transaction. She qualifies for the principle residence exclusion at the time of sale and she was able to exclude the entire amount of her gain. unfortunately the transaction did not work out and she repossessed the property after the buyer defaulted. If Corrine later resales the home which of the following statements is true?

a. the amount previously excluded must be recaptured and is subject to capital gain tax transfer in the year of resale.

b. the exclusion will still apply to the orginal sale but under no circumstances can it be used to shelter gain on the repossession or resale.

c. the exclusion may apply to all 3 transactions but only of Corinne owned and used property as her principal residence for 2 of the last 5 years ending on the date of resale.

d. Corrine may be eligible to exclude gain on the repossession and the resale as well as the original sale but only if she resells the home within one year after repossessing it.

Answer rating: 100% (QA)

Solution The statement which is true is d Corrine may be eligible t... View the full answer