Final answer:
Jake will realize a taxable gain of $1,000 by selling his car for $2,400 when he bought it for $1,400, which makes the statement true. In the other contexts, Freda would see a gain of $100,000 and Ben would have an equity gain of $60,000 on his house.
Step-by-step explanation:
The question you've asked relates to understanding taxable gains from the sale of an asset, in this case, a car. This is an important concept in both business and personal finance. When Jake sells his car for $2,400 and he purchased it for $1,400, the difference between the selling price and the purchase price represents his gain on the sale. The calculation is straightforward:
- Selling Price: $2,400
- Purchase Price (Cost Basis): $1,400
- Taxable Gain: Selling Price - Purchase Price = $2,400 - $1,400 = $1,000
Therefore, the statement that Jake will realize a taxable gain of $1,000 if he purchased the car for $1,400 is true.
Regarding the other examples provided for context:
- Freda would realize a gain of $100,000 if she sells her house for $250,000 which she purchased for $150,000.
- Ben has a potential equity gain of $60,000 on his house (current value at $160,000 minus the purchase price of $100,000), ignoring the loan details for the sake of this example.
In the case of Marvin, who is considering purchasing a used car, he needs to assess factors beyond initial cost, such as the vehicle's condition, any additional fees, maintenance history, and potential future costs to determine which car would be more financially advantageous.