An Individual Taxpayer Received a Valuable Painting from His Uncle

question 104

True/False

An individual taxpayer received a valuable painting from his uncle, a famous painter. The painter created the painting. 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.

---

Definitions:

Straight-line Method

A method of calculating depreciation of an asset by evenly spreading its cost over the expected useful life.

Semiannual Interest

Interest payments made twice a year on loans, bonds, or deposits.

Bond Liability

A financial obligation representing money a company owes to bondholders, to be repaid at a future date, typically with interest.

Market Rate

The current interest rate available in the marketplace on loans, bonds, or deposits, often influenced by supply and demand and the monetary policy of central banks.