Sandy Cole realized a loss on sale of an investment asset to her mother, Lynne. If the facts and circumstances prove that the selling price was an arm's length market price, Sandy can recognize the loss.

Question

Quizplus · Accepted Answer

The IRS does not allow the deduction of losses on sales or trades of property between family members, as these transactions are considered non-arm's length, regardless of whether the selling price reflects the fair market value.

Sandy Cole Realized a Loss on Sale of an Investment