T bought an antique desk and chair from her employer for $50 in Year 1 when the firm bought all new office furniture. The desk and chair had a fair market value of $500. The property increases in value to $700 in Year 2, and T sells it for $900 in Year 3. a. T has realized income of $450 in Year 1 only if the difference between the value of the items and their price was intended as compensation. b. T will realize income of $450 in Year 1 regardless of her employer’s motive. c. T will realize income in Year 2 because the property has increased in value. d. None of the above
T bought an antique desk and chair from her employer for $50 in Year 1 when the firm
bought all new office furniture. The desk and chair had a fair market value of $500.
The property increases in value to $700 in Year 2, and T sells it for $900 in Year 3.
a. T has realized income of $450 in Year 1 only if the difference between the
value of the items and their price was intended as compensation.
b. T will realize income of $450 in Year 1 regardless of her employer’s motive.
c. T will realize income in Year 2 because the property has increased in value.
d. None of the above
T grows beets in her own garden. Although T detests beets, she will be required to
recognize income when:
a. She harvests her beets.
b. She consumes beets that she could have sold for $100.
c. She sells beets for $100 to somebody who actually likes them.
d. She exchanges $100 worth of beets for $100 worth of spinach grown by her
neighbor.
e. Both (c) and (d) are correct
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