Question

True or false: Jake sold his car for $2400 in cash this year. He will realize a taxable gain of $1000 if he purchased the car for $1400

Answer 1

True, Jake will realize a taxable gain of $1000 by selling his car for $2400 when he purchased it for $1400, resulting in a capital gain.

Step-by-step explanation:

The assertion that Jake will realize a taxable gain of $1000 if he sold his car for $2400 and purchased it for $1400 is true. To calculate this gain, we subtract the original purchase price from the selling price. In this case, subtracting $1400 (the amount he paid for the car) from $2400 (the selling price) would indeed give us a gain of $1000. This is often referred to as a capital gain, which is the profit from the sale of property or an investment.