Identify the Rule Dictating That on a Sale of an Asset

question 48

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:

False Advertising

The act of misleading consumers through deceptive, incorrect, or unsubstantiated claims about a product or service.

Loss Leader

A pricing strategy where a product is sold at a loss to attract customers, hoping they will make additional purchases.

Legal Statement

A formal written declaration, usually prepared by a lawyer, that outlines the facts or circumstances pertaining to a legal matter.

Consideration

Something that has value in the eyes of the law, and which a promisor receives in return for a promise.