In 2012,Harold Purchased a Classic Car That He Planned to Restore

question 65

Multiple Choice

In 2012,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 2016.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:

CPI Rose

Refers to an increase in the Consumer Price Index, indicating that the average prices of consumer goods and services have gone up, often a measure of inflation.

$7 Per Hour

A specified wage rate where an individual or worker is paid seven dollars for each hour worked.

Purchasing Power

The economic value of a currency depicted by the number of goods or services obtainable by a single monetary unit.

US$ Per C$

The exchange rate that defines how much one can buy in US dollars (US$) with one Canadian dollar (C$).