Which of the following statements is false? A. When property is sold between tax

Question

Which of the following statements is false?

A. When property is sold between taxpayers that fit the Internal Revenue Code's definition of "related parties," gain or loss is not recognized since generally it is not an arms-length transaction.

B. IRC§1231 property includes both real and personal property used in a trade or business and held for more than one year.

C. IRC§1231 has no other function other than to characterize the gain or loss of property falling within its provisions as either capital gain or ordinary loss.

D. Other provisions of the Internal Revenue Code may override IRC§1231 and convert capital gain into ordinary income especially if the depreciation recapture provisions of IRC§1245 & 1250 apply.

Explanation / Answer

A. When property is sold between taxpayers that fit the Internal Revenue Code's definition of "related parties," gain or loss is not recognized since generally it is not an arms-length transaction.
The IRS provide sale between related parties gain or loss is recognized as ordinary Income .

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