Recognized gains and losses from disposition of a capital asset may occur as a result of a:
A) Sale.
B) Exchange.
C) Casualty.
D) Condemnation.
E) All of the above.

Question

Quizplus · Accepted Answer

Recognized gains and losses can occur as a result of a sale, exchange, casualty, or condemnation. In a sale, the gain or loss is recognized based on the difference between the sale price and the adjusted basis of the asset. In an exchange, the gain or loss is recognized based on the difference between the fair market value of the asset received and the adjusted basis of the asset given up. In a casualty or condemnation, the gain or loss is recognized based on the difference between the amount of compensation received and the adjusted basis of the asset.

Recognized Gains and Losses from Disposition of a Capital Asset