Pedro Owns 5 Rental Properties

question 13

Multiple Choice

Pedro owns 5 rental properties. He contracts with East Lake Properties, Inc., to manage the real estate. East Lake obtains tenants, negotiates leases, makes necessary repairs, pays expenses related to the properties, and remits monthly net receipts to Pedro.
I.Pedro's sale of the properties at a gain will result in a capital gain.
II.Pedro's sale of the properties at a loss results in an ordinary loss on his tax return.
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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:

UCC

The Uniform Commercial Code represents a collection of statutes offering legal guidelines and regulations for commercial or business activities and transactions within the United States.

CISG

The treaty known as the United Nations Convention on Contracts for the International Sale of Goods sets a standardized law for international sales transactions.

Sales Contract

A legally binding agreement between a buyer and a seller detailing the terms and conditions of the sale of goods or services.

Uniform Commercial Code

A collection of laws that govern commercial transactions in the United States, aiming to standardize the law in all 50 states.