An Individual Taxpayer Who Is Not a Dealer in Real

question 98

Multiple Choice

An individual taxpayer who is not a dealer in real estate plans to subdivide a parcel of land into four lots and sell them at a substantial gain.The parcel of land had been held six years.In order to qualify for capital gain treatment,the individual must satisfy all of the requirements except

• A)the individual must not hold any other real property primarily for sale in the ordinary course of business.
• B)no substantial improvements can be made while holding the lots if the improvements substantially increase the value of the lots.
• C)the parcel of land (or any part of it)cannot have been held primarily for sale to customers in the individual's business.
• D)All of the above criteria must be satisfied to allow capital gain treatment.

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Definitions:

Assembly Department

A section within a manufacturing facility where components are assembled into final products.

Process Cost System

An accounting system used to track and allocate costs of production by processes or departments, commonly used in industries where goods are produced in a continuous process.

Advertising Company

A business specializing in creating, planning, and handling advertising and sometimes other forms of promotion for its clients.

Chemical Company

A business entity that specifically focuses on the manufacturing, research, and sale of chemicals and chemical-based products.