On March 3,2010,Craig Bought a Business-Use Vehicle for $20,000

question 89

Multiple Choice

On March 3,2010,Craig bought a business-use vehicle for $20,000.He used the vehicle for three years and properly deducted a total of $12,000 as depreciation expense during this period.At the end of 2013,Craig sells the vehicle for $7,500.Why is Craig's deductible loss $500?
I.Craig has already recovered $12,000 of his investment through the depreciation deduction.
II.The adjusted basis of the vehicle was $12,000 at the date of sale.
III.$7,500 of the adjusted basis was recovered because of the sale.
IV.The realized loss is recognized because it was incurred with business-use property.

• A)Statements I and III are correct.
• B)Statements I, III and IV are correct.
• C)Statements II and III are correct.
• D)Only statement IV is correct.
• E)Statements I, II, III, and IV are correct.

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Horizontal Axis

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