Elizabeth Sells a Painting That Has a Fair Market Value

question 104

Multiple Choice

Elizabeth sells a painting that has a fair market value of $9,000 to Jonathan for $6,000. Which of the following statements about the tax effect of the sale is/are correct?
I.If Elizabeth is an art dealer and she sold the painting to Jonathan because she needed cash quickly, Jonathan does not recognize any income from the sale.
II.If Jonathan owns 60% of Elizabeth's company, Jonathan 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:

Cognitive Dissonance

The mental discomfort experienced by a person who holds conflicting beliefs, values, or attitudes, especially relating to behavioral decisions and attitude change.

Role Playing

A teaching or therapeutic technique that involves acting out roles or scenarios, often used to practice skills, explore complex situations, or analyze behavior.

Attitude Change

A psychological process in which an individual's feelings, beliefs, and behaviors toward a person, thing, or event (an attitude object) are modified.

Role Playing

A method for learning or therapy involving acting out roles or situations to gain insight or practice behaviors.