An Individual Taxpayer Received a Valuable Painting from His Uncle

question 11

True/False

An individual taxpayer received a valuable painting from his uncle, a famous painter. The painter did not create the painting, but had purchased it from another artist. After the taxpayer held the painting for two years, he sold it for a $400,000 gain. The gain is a long-term capital gain.

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Definitions:

Luxury Good

A good for which demand increases more than proportionally as income rises, often perceived as status symbols.

Economic Downturn

a period of poor economic performance across a country or globally, characterized by reduced consumer spending, business investment, and employment.

Inferior Good

A type of good for which demand decreases as the income of consumers increases.

Perfect Substitutes

Identical products.