Taxpayers can recognize a taxable gain even though an asset's real economic value has declined.

Question

Quizplus · Accepted Answer

This is because the tax code often requires taxpayers to recognize gains or losses based on the sale price of the asset, rather than its actual economic value. For example, if an individual sells a stock for $10,000 that they originally purchased for $5,000, they would need to recognize a taxable gain of $5,000, even if the value of the stock had declined since they originally purchased it.

Taxpayers Can Recognize a Taxable Gain Even Though an Asset's