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
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
T (a cash method taxpayer) pays $250,000 for a house to be held as an investment (it is
actually worth $300,000).
a. In all cases, T would be required to recognize $50,000 as income in the year he
buys the house.
b. T will never be required to recognize income until he disposes of the house in
an arm’s length sale or exchange.
c. If T acquired the house from a person who owes him $50,000 for services rendered,
T would be required to recognize $50,000 as income in the year he buys
it.
d. (c) would be the correct answer only if T accepts the house in satisfaction of the
debt owed to him for services rendered.
e. None of the above.
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