Patti Sells a Painting That Has a Fair Market Value

question 1

Multiple Choice

Patti sells a painting that has a fair market value of $9,000 to James for $6,000. Which of the following statements about the tax effect of the sale is/are correct?
I.If James is an employee of Patti's, no income is recognized from the sale.
II.If James is Patti's brother, James does not recognize any income from the sale.
III.If Patti is an art dealer and she sold the painting to James because she needed cash quickly, James does not recognize any income from the sale.
IV.If James owns 60% of Patti's company, James does not recognize any income from the sale.
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• A)Only statement II is correct.
• B)Only statement III is correct.
• C)Only statements II, and III are correct.
• D)Only statements II, III, and IV are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Psychoanalytic Theories

A set of theories originating from Sigmund Freud that focus on unconscious motivations and conflicts as key factors influencing behavior and personality.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Unconscious Mind

A part of the mind that operates outside of conscious awareness, containing desires, memories, and knowledge that influence behavior and thought processes.

Agents of Socialization

Institutions or individuals that play a significant role in integrating individuals into the norms, values, and mores of a society.