In 2014, Harold Purchased a Classic Car That He Planned

question 125

Multiple Choice

In 2014, 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 2018. 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