Which of the Following Losses Are Generally Deductible

question 121

Multiple Choice

Which of the following losses are generally deductible?
I.Loss on the sale of corporate stock.
II.Losses incurred in carrying on a trade or business.
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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:

Reasonable Value

A fair market price or level of compensation that would be deemed equitable under normal circumstances.

Gratuitous Promise

A promise for which no consideration is given or required in return, often unenforceable without a deed or under specific legal conditions.

Consideration

In contract law, consideration refers to the value (such as money, a service, or a promise) that is given in exchange for a contractual obligation from the other party.

Illusory Contract

An agreement that fails to bind one party due to vague or unenforceable terms, making it appear to be a contract only in illusion.