1. Explain the difference in determining the amount of income recognized from a conduit entity…

1. Explain the difference in determining the amount of
income recognized from a conduit entity versus a taxable entity.

2. What effect does an asset’s adjusted basis have in
determining the gain or loss realized upon its sale?

3. This chapter noted that returns on investment are
taxable, whereas returns of investment are not taxable. What is the conceptual
basis for this treatment? Cite examples of each type of return, and explain why
they are or are not taxable.