Which of the following is true regarding disallowed losses between related taxpayers?
A)The tax laws essentially treat related parties as the same taxpayer.
B)The holding period of the seller carries over to the buyer.
C)The related person always receives a carryover basis.
D)The seller's realized loss is deferred until the buyer sells the assets.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

The tax laws essentially treat related parties as the same taxpayer, which means that disallowed losses between related taxpayers are not recognized for tax purposes. This prevents related parties from artificially shifting losses between them to gain tax advantages. The holding period of the seller or buyer and the basis of the assets may be affected, but the loss itself is disallowed.

Which of the Following Is True Regarding Disallowed Losses Between