Taxpayers can recognize a taxable gain on the sale of an asset even though an asset's real economic value has declined.

Question

Quizplus · Accepted Answer

Tax treatment is not based on the real economic value of an asset but on the sale price, which could include other factors such as market demand and supply, bargaining power, and sale terms. As a result, a taxpayer may have a taxable gain or loss irrespective of the actual economic value of the asset at the time of sale.

Taxpayers Can Recognize a Taxable Gain on the Sale of an Asset