Which of the Following Statements Best Describes the Tax Law

question 4

Multiple Choice

Which of the following statements best describes the tax law approach to recognizing gain or loss realized in an exchange?

• A)Gain or loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.
• B)Gain or loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code.
• C)Gain realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but loss realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.
• D)Loss realized is recognized unless specifically stated otherwise in the Internal Revenue Code, but gain realized is not recognized unless specifically stated otherwise in the Internal Revenue Code.

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Definitions:

Accumulated

The total amount collected or gathered over a period, often referring to earnings, benefits, or other financial measures.

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Capital Account

An account on a national or international level showing the net change in asset ownership for a country, or on a company level, it represents the funds contributed by owners plus retained earnings.

Closed

Closed refers to the status of an account, position, or transaction that has been settled or concluded, with no further action or activity pending.