Occasionally, realized gains are not recognized for tax purposes. These situations occur because
I.certain gains are excluded due to legislative grace.
II.gains are deferred on certain types of property transactions where the wherewithal-to-pay the tax resulting from the transaction is lacking.

Question

Occasionally, realized gains are not recognized for tax purposes. These situations occur because
I.certain gains are excluded due to legislative grace.
II.gains are deferred on certain types of property transactions where the wherewithal-to-pay the tax resulting from the transaction is lacking.
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Quizplus · Accepted Answer

Both statements are correct. Statement I refers to specific tax exemptions or exclusions that are allowed by law. Statement II refers to deferring gains when the taxpayer does not have the funds to pay the tax resulting from the transaction. This is often seen in situations such as like-kind exchanges or installment sales.

Occasionally, Realized Gains Are Not Recognized for Tax Purposes