Identify the rule dictating that on a sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale:

Question

Quizplus · Accepted Answer

The return of capital principle dictates that on a sale of an asset, a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale. The principle recognizes that a taxpayer is simply recovering their initial investment in the asset, and therefore should not be taxed on that portion of the sale.

Identify the Rule Dictating That on a Sale of an Asset