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:

Correcting Entry

An accounting entry made to correct an error found in the previously issued financial statements or records.

Service Revenue

Income earned by a company for providing intangible products or services to customers.

Accounts Receivable

The sum that clients or customers owe to a business for products or services that have been delivered, but not yet compensated for.

Current Liabilities

Financial obligations or debts a company must pay within a year or within its normal operating cycle.