Which of the following statements most accura tely describes the gain from the s

Question

Which of the following statements most accura tely describes the gain from the sale of property that is substantially appr eciated at the time of the sale?

A It is never passive activity gross income.

B It is passive activity gross inco me if the property was used in a passive activity for 20 perc ent of the taxpayer's holding period.

C It is passive activity gross inco me if the property was used in a passive activity for the 12 months immediately preceding the date of disposition.

D It is always passive activity gross income.

Explanation / Answer

The correct option is B) It is a passive activity gross income if the property was used in a passive activity for 20 percent of the taxpayer's holding period. The gain from the disposition of substantially appreciated property is passive income if the property was used in passive activity for either:

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