Identify the Rule Dictating That on a Sale of an Asset

question 19

Multiple Choice

Identify the rule dictating that on a sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale:

• A) Tax benefit rule
• B) Constructive receipt
• C) Return of capital principle
• D) Wherewithal to pay
• E) None of the above

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Definitions:

Mineral Deposit

Dense gatherings of minerals from which materials of economic value can be obtained.

Weathering

The breakdown of rocks, soil, and minerals as well as artificial materials through contact with the Earth's atmosphere, organisms, and water.

Precipitation

Any kind of water, either as a liquid or a solid, that drops from the clouds and lands on the Earth, covering types like rain, snow, sleet, and hail.

Gold Placer Deposits

Concentrations of gold found in sedimentary deposits, formed by gravity separation during sedimentary processes.