Question

T/F: Frank sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As a result of these sales, $10,000 is subject to income tax.

Answer 1

True, the $10,000 gain from the sale of a coin collection is subject to income tax, while the $9,000 loss from the sale of a personal use automobile is not deductible.

Step-by-step explanation:

The statement regarding whether Frank's gain from the sale is subject to income tax is partly true. When Frank sold his personal use automobile for a loss of $9,000, this loss is typically not deductible for tax purposes since it's a personal use asset. On the other hand, his sale of a personal coin collection for a gain of $10,000 is considered to be a sale of a collectible, which generally is subject to capital gains tax. Therefore, the gain of $10,000 is the amount that would be subject to income tax, not offset by the loss from the automobile, as personal losses are generally not deductible.