Identify the Rule Dictating That on a Sale of an Asset

question 51

Multiple Choice

Identify the rule dictating that on a sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale:

• A) Tax benefit rule.
• B) Constructive receipt.
• C) Return of capital principle.
• D) Wherewithal to pay.
• E) None of the choices are correct.

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Definitions:

Exemption Clause

A provision in a contract that limits or eliminates one party's liability for certain acts or omissions.

Illegal Restraint

Actions or practices that unlawfully restrict an individual's freedom of movement or personal liberty.

Act Of God

An event caused by natural forces beyond human control, such as floods or earthquakes, that is not attributable to human actions.

Fundamental Breach

A serious violation of a contract that permits the aggrieved party to terminate the agreement and seek damages.