You own a condominium in Orlando, Florida. During the recent downturn in housing values in the area your condo's value declined by $75,000. Your economic income ________ and your taxable income ________.

Question

Quizplus · Accepted Answer

Economic income considers changes in the value of assets, so it fell due to the decline in the condo's value. Taxable income is based on realized gains and losses, not unrealized changes in asset value, so it was unchanged.

You Own a Condominium in Orlando, Florida