Which of the following is true with respect to the related party rules?
A)Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return.
B)A taxpayer's uncle is a related party for purposes of Section 267.
C)A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party.
D)Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder.
E)None of these

Question

Quizplus · Accepted Answer

C) A disallowed loss on a related party transaction can indeed be used to offset any future gain when the property is sold to an unrelated party. This rule helps prevent taxpayers from recognizing losses on transactions within a closely related group while still allowing them to eventually utilize the loss if the property is later sold outside that group.

Which of the Following Is True with Respect to the Related