Charlotte Purchases a Residence for $105,000 on April 13, 2004

Multiple Choice

Charlotte purchases a residence for $105,000 on April 13, 2004. On July 1, 2012, she marries Howard and they use Charlotte's house as their principal residence. If they sell their home for $390,000, incurring $20,000 of selling expenses and purchase another residence costing $350,000. Which of the following statements is/are correct concerning the sale of their personal residence? I If they sell the residence on June 1, 2014, they must recognize a gain of $15,000 on the sale. II. If they sell the residence on August 1, 2014, they will recognize no gain on the sale.

A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.