QUESTION 21

1. Deidra has owned and occupied her principal residence for 10 years. Two and one-half years ago she married Doug who moved into her house. Doug has never owned a home. When Deidra is transferred to another city, she sells the house and has a realized gain of $425,000. Deidra can exclude the realized gain of $425,000 from her gross income under 121 if she and Doug file a joint return.

   True

   False

QUESTION 22

1. Sandra is single and does a lot of business entertaining at home. Because Arthur, Sandras 80-year old dependent grandfather who lived with Sandra, needs medical and nursing care, he moved to Twilight Nursing Home. During the year, Sandra made the following payments on behalf of Arthur:

   Room at Twilight	$4,500
   Meals for Arthur at Twilight	850
   Doctor and nurse fees	700
   Total	$6,050

   Twilight has medical staff in residence. Disregarding the AGI floor, how much, if any, of these expenses qualify for a medical deduction by Sandra?

   	a.	$6,050
   	b.	$5,200
   	c.	$700
   	d.	$6,750