Identify the Rule Dictating That on Sale of an Asset

question 64

Multiple Choice

Identify the rule dictating that on 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:

Confirmation Bias

The tendency to seek out information that conforms to one’s own definition of or solution to a problem.

Economic Person

A concept in economics and sociology that describes an individual who acts in a rational manner, making decisions based on maximizing personal financial gain.

Rational Decisions

Choices made based on logical reasoning, where alternatives are objectively evaluated based on facts and a clear understanding of goals.

Economic Gain

The benefit or profit derived from engaging in economic activities or investments.