Discussion 1: Marilyn owns land that she acquired three years ago as an investment for $250,000. She sells the land two years later for $300,000. Also read the followed taken from Chapter 4 Gross Income: 4-1b Recovery of Capital Doctrine Although gross income is clearly defined to include all income, the Supreme Court has held that gross income is not synonymous with gross receipts. Rather, a taxpayer does not have income until recovering any amount of capital that might have been invested in the item sold.' This concept, known as the recovery of capital doctrine, prevents income from being taxed more than once. The rationale is that capital is the accumulation of previ- ously taxed income. In its simplest application, this doctrine means that sellers can reduce their gross receipts (selling price) by the adjusted basis of the property sold to determine the amount of gross income.? In a new post, use the Reply button at the bottom of this page to respond to the following questions: Does the "recovery of capital doctrine" apply to Marylyn transactions? Explain? What is significance of one's (adjusted) basis for income tax purposes