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3 years ago

Compare and contrast different ways in which a taxpayer triggers a realization event by disposing of an asset.

Business

1 answer:

aniked [119]3 years ago

8 0

Answer:

There are many ways a taxpayer can trigger a realization event. She can trigger it through a sale or trade by receiving a value greater than the disposed asset. She can also trigger a realization event by making a gift to charity. Other ways include disposal, for example, to a landfill and destruction through natural disaster. In the latter cases, there is a loss to the taxpayer. With a natural disaster, the taxpayer can only obtain a realization gain if reimbursed by the insurance company.

Explanation:

A realization event happens when there is a sale or a disposal of an asset or a discharge from a liability. There is usually an increase in the value realized from the disposal, which is greater than the asset's value before disposal. It also happens when the taxpayer receives a relief from a liability or completes a profitable transaction.

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