The Use of ______________ as the Key Criterion to Determine

question 51

Multiple Choice

The use of ______________ as the key criterion to determine the acquisition date ensures that the substance of the transaction determines the accounting rather than the form of the transaction.

• A)physical possession
• B)control
• C)payment of consideration
• D)valuation.

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Definitions:

At-risk Rules

These are tax rules designed to limit the amount of deductible losses from businesses or income-producing activities to the amount the taxpayer has at risk.

Passive Loss Rules

Tax regulations that limit the amount of losses investors can deduct from passive activities, including some investments in real estate.

Materially Participate

The level of involvement by a taxpayer in the operations of a business that is sufficient enough to qualify for tax deductions related to active participation.

At-risk Amount

The amount of money in a particular investment that can be claimed as a deduction in the event of a loss.