The following assets in Sarah's business were sold in 2020: Holding Period Gain/(Loss) Asset Office Equipment 7 years $2,500 Automobile 12 months ($1,200) XYZ Stock (capital asset) 3 years $2,000 The office equipment had a zero adjusted basis and was purchased for $6,000. The automobile was purchased for $5,000 and sold for $3,800. The XYZ stock was purchased for $2,500 and sold for $4,500. In 2020 (the year of sale), Sarah should report what amount of net capital gain and net ordinary income? a. $2,000 LTCG b. $500 LTCG and $1,200 ordinary loss c. $2,500 LTCG and $1,200 ordinary loss d. $2,000 LTCG and $500 ordinary gain e. None of the above
The following assets in Sarah's business were sold in 2020: Holding Period Gain/(Loss) Asset Office Equipment 7 years $2,500 Automobile 12 months ($1,200) XYZ Stock (capital asset) 3 years $2,000 The office equipment had a zero adjusted basis and was purchased for $6,000. The automobile was purchased for $5,000 and sold for $3,800. The XYZ stock was purchased for $2,500 and sold for $4,500. In 2020 (the year of sale), Sarah should report what amount of net capital gain and net ordinary income? a. $2,000 LTCG b. $500 LTCG and $1,200 ordinary loss c. $2,500 LTCG and $1,200 ordinary loss d. $2,000 LTCG and $500 ordinary gain e. None of the above
Chapter17: Property Transactions: § 1231 And Recapture Provisions
Section: Chapter Questions
Problem 37P
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Transcribed Image Text:The following assets in Sarah's business were sold in 2020:
Holding Period Gain/(Loss)
Asset
Office Equipment
7 years
$2,500
Automobile
12 months
($1,200)
XYZ Stock (capital asset) 3 years
$2,000
The office equipment had a zero adjusted basis and was purchased for $6,000. The automobile
was purchased for $5,000 and sold for $3,800. The XYZ stock was purchased for $2,500 and
sold for $4,500. In 2020 (the year of sale), Sarah should report what amount of net capital gain
and net ordinary income?
a. $2,000 LTCG
b. $500 LTCG and $1,200 ordinary loss
c. $2,500 LTCG and $1,200 ordinary loss
d. $2,000 LTCG and $500 ordinary gain
e. None of the above
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