Question

For the scenario described (d. $0), what is the recognized loss for the automobile when the realized loss is $18,000, and the adjusted basis is $45,000?

A) $18,000
B) $0
C) $27,000
D) $45,000

Answer 1

The recognized loss for the automobile, given an adjusted basis of $45,000 and a realized loss of $18,000, is $0 as personal losses on sales of personal vehicles are not deductible for tax purposes.

Step-by-step explanation:

In the scenario described, with an adjusted basis of $45,000 and a realized loss of $18,000, the recognized loss for the automobile would be $0 (Option B). This is because, according to most tax rules, a personal loss on the sale of a personal automobile is not deductible. As such, even though the loss is realized, it would not be recognized for tax purposes.