All of the Following Conditions Would Encourage a Taxpayer to Avoid

question 513

Multiple Choice

All of the following conditions would encourage a taxpayer to avoid like- kind exchange treatment on the disposition of an otherwise qualifying asset except

• A) the availability of net operating loss carryovers.
• B) a realized loss on the asset disposed of.
• C) the disposition of a capital gain asset when the taxpayer has a capital loss carryover.
• D) expected lower tax rates in the future.

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Definitions:

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction.

Leeway

The amount of freedom to move or act that is available; in finance, it often refers to the flexibility allowed in making investment decisions or adjustments.

Earnings Management

The practice of using flexibility in accounting rules to manipulate the apparent profitability of the firm.

P/E Ratios

Price-to-Earnings Ratio, a valuation metric that compares the price of a stock to the company’s earnings per share, indicating how much investors are willing to pay per dollar of earnings.