Question

which of the following events would generally result in a capital gain? question 6select one: a. the receipt of alimony from a former spouse. b. the sale of an apartment building by a real estate rental company. c. a payment of a one-time bonus to an employee. d. the sale of an apartment building by a real estate construction company.

Answer 1

The sale of an apartment building by a real estate rental company typically results in a capital gain, as this represents an increase in the value of an asset from the purchase price to the sale price.

Step-by-step explanation:

A capital gain is the increase in the value of an asset between when one buys and sells it. Housing and other tangible assets are forms of financial investment that pay a rate of return in the form of capital gains.

Out of the options provided, the sale of an apartment building by a real estate rental company (option b) would generally result in a capital gain, as this is an example of an investor buying an asset and then selling it for a higher price than the purchase price.

Examples to illustrate this concept include:

• Freda purchasing a house for $150,000 and selling it for $250,000, resulting in a $100,000 capital gain.
• Frank buying a house for $100,000 which then increases in value to $160,000, providing him with a potential capital gain should he choose to sell.

Alternatively, the receipt of alimony, payment of a one-time bonus, or the sale of an apartment building by a construction company are not typically events that result in capital gains.