In 2013, Aaron Purchased a Classic Car That He Planned

question 46

Essay

In 2013, Aaron purchased a classic car that he planned to restore for $12,000. However, Aaron is too busy to work on the car and he gives it to his daughter Ellie in 2017. At this time, the fair market value of the car has declined to $10,000. Aaron paid no gift tax on the transaction. Ellie completes some of the restoration herself with out-of-pocket costs of $5,000. She later sells the car for $30,000. What is Ellie's recognized gain or loss on the sale of the car?

---

Definitions:

Childbirth

The act of a baby being born, which includes the labor and delivery stages.

Cesarean Section

A surgical procedure used to deliver a baby through incisions in the abdomen and uterus, often performed when vaginal delivery would put the baby or mother at risk.

Surgical Delivery

A medical procedure where surgery, typically a cesarean section, is used to deliver a baby.

Incision

A cut made through the skin and tissue during surgery, typically to allow access to the area being operated on.