When a Taxpayer Is Released from a Liability in a Like-Kind

question 10

Multiple Choice

When a taxpayer is released from a liability in a like-kind exchange,the amount of the release:

• A)Never triggers gain recognition.
• B)Always triggers a gain to be recognized.
• C)Is treated as boot and may trigger gain recognition.
• D)Does not affect the like-kind exchange in any way.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Non-Controlling Interest

A stake in a company that is not large enough to control company decisions, representing ownership by minority shareholders in a subsidiary not wholly owned by the parent.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the investor's share of the investee's profit or losses.

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.