Susan purchased a lot for investment purposes. She paid $10,000 for the lot. Three years later she sold the lot to her daughter for $8,000. Susan cannot deduct the loss due to

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Quizplus · Accepted Answer

Susan cannot deduct the loss due to the Arm's-Length Transaction Concept, which means the transaction was between related parties (mother and daughter), and the price may not reflect the fair market value of the lot. Therefore, the loss is not considered a genuine economic loss and cannot be used for tax purposes.

Susan Purchased a Lot for Investment Purposes