Which of the following statements regarding the tax treatment of a principal residence isNOTcorrect?

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.

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.

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