Question

Brian purchased two automobiles for personal use. Automobile 1 had an adjusted basis of $20,000, and automobile 2 had an adjusted basis of $10,000. In the current year, Brian sold automobile 1 for $15,000 and automobile 2 for $15,000. What gain or loss should Brian recognize on the sales of the automobiles g

Answer 1

Automobile 1, Loss of $5,000

Automobile 2, Gain of $5,000

Step-by-step explanation:

Calculation of gain or losses on sale of Automobile 1

Sale value of Automobile 1 $15,000

Less: Adjusted Basis of Automobile 1 $20,000

Loss on sale of Automobile 1 $5,000

Calculation of gain or losses on sale of Automobile 2

Sale value of Automobile 2 $15,000

Less: Adjusted Basis of Automobile 2 $10,000

Gain on sale of Automobile 2 $5,000