Maryland Home Improvement PSI Practice Exam

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Prepare for the Maryland Home Improvement Test. Study using flashcards and multiple-choice questions, each with hints and explanations. Get ready to excel on your exam!

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What required information must be reported to the IRS for most closed real estate transactions?

Buyer name(s) and social security number(s).
The property financing.
The mortgage lender's name and address.
The sale price.

The correct answer is: The sale price.

The correct answer focuses on the requirement for reporting the sale price of the property in most closed real estate transactions. When a real estate transaction is completed, the IRS mandates that certain information be recorded to ensure compliance with tax laws. One of the critical pieces of information that must be reported is the sale price. This amount is essential for various reasons, including calculating capital gains taxes that may be applicable when a property is sold. Accurately reporting the sale price helps the IRS track income derived from real estate sales. While there are other important details in a real estate transaction, such as identifying parties involved, property financing, and mortgage lender information, these aspects are not uniformly required to be reported to the IRS in the same manner as the sale price. Understanding this requirement helps ensure that taxpayers remain compliant with federal tax regulations regarding real estate transactions.