Elise Sells a Painting That Has a Fair Market Value

question 94

Multiple Choice

Elise sells a painting that has a fair market value of $9,000 to Jon for $6,000. Which of the following statements about the tax effect of the sale is/are correct?
I.If Jon is an employee of Elise's, no income is recognized from the sale.
II.If Jon is Elise's brother, Jon does not recognize any income from the sale.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Mental Representations

Internal cognitive symbols, ideas, or concepts that stand in for objects, events, or conditions, influencing how we perceive and interact with the world.

Quadrupled

Increased by four times in quantity or value.

Virtually

In essence or effect, though not in actual fact; almost or nearly.

Prenatal Factors

Environmental and genetic influences that affect the development of the fetus during pregnancy.