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Multiple Choice 1-19 (Algorithmic) A Brief Overview of Capital Gains and Losses (LO 1.8) Alexis purchased a rental house 3 years ago for $184,000. Her depreciation to date is $22,080. Due to a decrease in real estate prices, she sells the house for only $174,800 in 2018. What is her gain or loss for tax purposes? O a. $12,880 gain. O b-$12,880 loss. c. $9,200 gain. od. $0. e. $22,080 loss.
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Answer #1

Original Purchase Price = 184,000

Less-Depreciation to date = 22,080

Written Down Value = 161,920

Sale Value = 174,800

Gain or Loss for tax purpose = 12,880 GAIN.

Note that the house having current written down value of 161,920 is sold for 174,800. Hence; there is a gain of 12,880.

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