Asked by Samantha Valadez on Jun 24, 2024
Verified
You own an oil painting that increases in value by $12,000 but you do not sell the painting. The $12,000 is counted as ________ income.
A) part of economic income but not part of taxable
B) both economic and taxable
C) taxable income but not economic
D) neither taxable nor economic
Economic Income
The total amount of monetary or other benefits received over a period, including wages, rents, interest, and profits, considering both realized and unrealized changes in value.
Taxable Income
The portion of an individual's or entity's income that is subject to taxation by the government after deductions and exemptions.
Oil Painting
A process of painting with pigments that are bound with a medium of drying oil, often used in artistic expressions.
- Clarify the idea of economic income and the method used for its determination.
- Gain an understanding of the influence alterations in asset values have on both economic and taxable income.
Verified Answer
AV
andrew valdesJun 30, 2024
Final Answer :
A
Explanation :
The $12,000 increase in value of the oil painting is considered part of economic income because it represents an increase in the owner's wealth. However, it is not considered taxable income until the painting is sold and the gain is realized.
Learning Objectives
- Clarify the idea of economic income and the method used for its determination.
- Gain an understanding of the influence alterations in asset values have on both economic and taxable income.