Sandra Sells a Business-Use Warehouse to Her Wholly Owned Corporation

question 33

Multiple Choice

Sandra sells a business-use warehouse to her wholly owned corporation. Sandra realizes a loss of $13,000 on the sale. (Sales price, $102,000, less adjusted basis, $115,000) . Tax law does not permit Sandra a deduction for the $13,000 loss. Which of the following explain(s) this tax result?
I.Arm's-length Transaction Concept.
II.Pay-As-You-Go Concept.
III.Legislative Grace Concept
IV.Business Purpose Concept.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Statements III and IV are correct.
• D)Statements I and III are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Grouping

A method in algebra to simplify expressions or solve equations by combining or partitioning terms.

Perfect Square Trinomial

A perfect square trinomial is a quadratic expression that can be expressed as the square of a binomial, characterized by specific relationships among its coefficients.

Perfect Square Trinomial

A trinomial expression that is the square of a binomial, characterized by having three terms where two are perfect squares and one is double the product of the square roots of those squares.

Zero-Factor Property

A principle stating that if the product of two quantities is zero, then at least one of the quantities must also be zero.