Roseanne Sells Her Personal Automobile for $1,000

question 137

Multiple Choice

Roseanne sells her personal automobile for $1,000. The car cost her $12,000 nine years ago. What are the tax effects of the current sale?
I.Roseanne recognizes a deductible loss of $11,000 on her current-year tax return due to the capital recovery concept.
II.Roseanne recognizes no loss on her tax return due to lack of business purpose with the automobile.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Admit

To confess or acknowledge truth or facts, often pertaining to legal or formal settings.

Growing Crops

Plants or agricultural produce that are currently growing and not yet harvested, often considered personal property for legal purposes.

UCC

Refers to the Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Common Law

A body of law derived from judicial decisions, rather than from statutes or constitutions.