Question

susan, a single taxpayer, sold her home because she has a new job in another city. on the sale date, she had owned the home and used it as a personal residence for 18 months. what is the maximum gain that susan can exclude on the sale of the residence?

Answer 1

Susan's incentive to work is affected by the assistance program that reduces her government benefits by a dollar for every dollar earned, leading to decreased motivation to work additional hours and consider opportunity costs.

Step-by-step explanation:

Work Incentives and Government Support

Susan, a single mother with three children, faces a dilemma with the current assistance program. She earns $8 per hour and can work up to 1,800 hours annually. However, if she chooses not to work, she'll receive $16,000 in government benefits. For every dollar she earns, her government support diminishes by a dollar.

Creating a table, we notice an impact on Susan's incentive to work. This kind of assistance program can discourage work because Susan's total income won't significantly increase with additional work hours due to the reduction in government support. Moreover, there are opportunity costs, such as time away from children or potential education opportunities, that might reduce her incentive to work. Reviewing Susan's possible hours, earnings, government support, and total income help us analyze the effects on her motivation to engage in the workforce.