Final answer:
David's employer's giving him a painting is classed as a gift, and upon selling the painting for profit, the transaction would incur capital gains tax based on the increase in value from the initial $5,000 to the $15,000 sale price.
Step-by-step explanation:
When David's employer gave him a painting worth $5,000, this transaction is typically viewed as a gift under the law. David would likely not have incurred any immediate tax liability on receiving the gift, but it is subject to gift tax rules, which consider the fair market value of the gift at the time it is given.
When David sells the painting five years later for $15,000, this sale is recognized as a disposal of an asset and can result in a capital gains tax liability. The law will consider the cost basis of the painting (the value of the painting when gifted) to calculate the gain on the sale which, in this case, is $10,000 ($15,000 sale price minus $5,000 cost basis).
In comparison to other examples, such as Freda buying a house for $150,000 in cash, which later appreciates to $250,000, or Ben buying a house for $100,000 with a loan and the value increasing to $160,000, these scenarios also involve the principle of asset appreciation and potential capital gains upon sale.