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 until the related parties are not related anymore. This is done to prevent related parties from transferring losses to each other and reducing their overall tax liability. The holding period and basis of the seller do not carry over to the buyer, and the seller's realized loss is not deferred until the buyer sells the assets.

Which of the Following Is True Regarding Disallowed Losses Between