Sometimes Taxpayers Should Structure a Transaction to Avoid the Application

question 93

Multiple Choice

Sometimes taxpayers should structure a transaction to avoid the application of like-kind provisions.Which of the following conditions is likely to cause a taxpayer to avoid like-kind treatment?

• A)Expected higher tax rates in the future.
• B)Less accelerated depreciation provisions expected in the future.
• C)A decline in the value of the asset being disposed of.
• D)None of the above.

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Definitions:

Apparent Agency

The legal doctrine that allows a third party to hold a principal liable for the acts of an agent, where the principal has given the appearance of agency.

Ratification

The process by which someone gives formal consent or approval to something, often a legal or contractual agreement.

Faithless Servant Doctrine

A legal principle that allows employers to recover compensation paid to an employee who has acted disloyally or in breach of contract.

Defendant Compensation

Financial or other forms of reparation awarded to a defendant, typically in civil lawsuits where the defendant may counter-claim against the plaintiff.