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.

---

Definitions:

Return On Total Assets

A financial ratio that measures the profitability of a company by calculating how effectively a company uses its total assets to generate profit.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, revenue, expenses, and cash flows of a parent company and its subsidiaries as one entity.

Equity Method

A method of accounting that allows a company to record profits and losses based on its share of ownership in another company.

Controlling Influence

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, typically seen in parent-subsidiary relationships.