A realized gain whose recognition is postponed results in the temporary recovery of more than the taxpayer's cost or other basis.

Question

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When a realized gain's recognition is postponed, it means that the taxpayer has not yet declared it on their tax returns, resulting in the temporary recovery of more than their cost or other basis. This is because the gain has not yet been included in their taxable income, so they have not yet paid taxes on it.

A Realized Gain Whose Recognition Is Postponed Results in the Temporary