Question

The following assets in Jack's business were sold in 2018: Asset Holding Period Gain/(Loss) Office equipment 6 years $1,100 Automobile 8 months ($ 800) ABC stock (capital asset) 2 years $1,400 Office equipment, purchased for $8,000, had a zero adjusted basis. The automobile was purchased for $2,000 and sold for $1,200. The ABC stock was purchased for $1,800 and sold for $3,200. In 2018 (the year of sale), Jack should report what amount of net capital gain and net ordinary income

Answer 1

Jack should report $1,400 of net capital gain and $300 of net ordinary income

Step-by-step explanation:

The amount of net capital gain that Jack should report should be $1,400 from sale of stock because. it was hold for 2 years (more than 1 year). So $1,400 should report.

As, in respect of the amount of the net ordinary income that he should report, we would have to make the following calculation:

net ordinary income= $1,100-$800

net ordinary income=$300

He should report the amount of $300 of net ordinary income