In 2009,Harold Purchased a Classic Car That He Planned to Restore

question 62

Multiple Choice

In 2009,Harold purchased a classic car that he planned to restore for $12,000.However,Harold is too busy to work on the car and he gives it to his daughter Julia in 2013.At this time,the fair market value of the car has declined to $10,000.Harold paid no gift tax on the transaction.Julia completes some of the restoration herself with out-of-pocket costs of $5,000.She later sells the car for $30,000.What is Julia's recognized gain or loss on the sale of the car?

• A)$0.
• B)$13,000.
• C)$15,000.
• D)$18,000.
• E)None of the above.

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Definitions:

Important Activities

Tasks or actions that hold significant value or priority in achieving goals or fulfilling responsibilities.

FOB

An acronym for "Free On Board," a term used in shipping agreements to indicate that the seller is responsible for the goods until they are loaded onto a vessel at the specified location.

FAS

Generally refers to Financial Accounting Standards, which are guidelines for how financial reports are to be prepared by companies.

Void Title

Not true title; e.g., the title held by someone who knowingly or unknowingly purchased stolen goods.