Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Inspired by B428, Frank Frenzy enters the real estate business as a sole propietor. He gets his sales agent license and handles 20 sales his

Inspired by B428, Frank Frenzy enters the real estate business as a sole propietor. He gets his sales agent license and handles 20 sales his first two years. Along the way he buys and sells several properties in his own name. In March of the next year he is talking with his accountant, Gertrude Greenshades. The real estate market has been rising and every sale Frank made resulted in a "gain." "I'll get taxed at a lower rate because I held the properties for more than a year, right?" he says to Gertrude. Which of the following is MOST correct?

A. Frank will get capital gains treatment since he has his real estate license and that is a seperate business.

B. Frank won't get capital gains treatment because he must hold properties for at least five years.

C. Frank will get capital gains treatment because each property was purchased for investment purposes.

D. Frank probably won't get capital gains treatment if he bought and sold several properties because it may mean he is in the business of buying and selling property and thus it is his stock in trade.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions