Identify the rule dictating that on sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale.
A)Tax benefit rule
B)Constructive receipt
C)Return of capital principle
D)Wherewithal to pay
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The rule dictating that on sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale is the return of capital principle. This principle is based on the idea that only the gain on the investment should be taxed, not the original investment.

Identify the Rule Dictating That on Sale of an Asset