On the sale of property between related parties, realized gains are recognized whereas realized losses are disallowed.

Name: On the sale of property between related parties, realized gains are recognized whereas realized losses are disallowed.
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Quizplus · Accepted Answer

This is true according to the IRS code. When a property is sold between related parties, any gains are recognized and taxed, but any losses are disallowed. This is to prevent people from artificially creating losses for tax purposes.

On the Sale of Property Between Related Parties, Realized Gains