Question

(CO 1) During the year, Marcus had the following transactions: Long-term loss on the sale of business use equipment: $6,000 Long-term loss on the sale of personal use camper: $2,000 Long-term gain on the sale of personal use boat: $1,000 Short-term loss on the sale of stock investment: $3,000 Long-term loss on the sale of land investment: $4.000 How are these transactions handled for income tax purposes? Explain your answer.

Answer 1

Following are the way, the given transactions handled for income tax purposes :

- $6000, long term loss on the sale of use equipment, is an ordinary business loss and can be deducted to offset revenue from business.

- $2000, long term loss on the sale of camper, is a personal and is not deductible.

- $1000, long term gain on the sale of personal use boat, is taxable and set-off against the capital loss on the sale of land investment and reduced the capital loss to $3000 from $4000.

- $3000, short term loss on the sale of stock investment is an ordinary loss and can be offset from revenue of business.

- $4000, long term loss on the sale of land investment, is a capital loss and has been reduced to $3000 after getting set off from gain on sale of personal use boat. The remaining unused capital loss of $3000 is carried forward to future years.

_____×_____

ALL THE BEST

Keep Learning