Noelle owns an automobile which she uses for personal use. Her adjusted basis is

Question

Noelle owns an automobile which she uses for personal use. Her adjusted basis is $45,000 (i.e., the original cost). The car is worth $22,000. Which of the following statements is incorrect?

a. If Noelle sells the car for $22,000, her realized loss of $23,000 is not recognized.

b.If Noelle exchanges the car for another car worth $22,000, her realized loss of $23,000 is not recognized.

c.If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss.

d.If Noelle sells the car for $48,000, her realized gain of $3,000 is not recognized.

Explanation / Answer

Personal casualty losses can be deducted subject to a $100 floor and a 10% of AGI floor. The correct options are:

a. If Noelle sells the car for $22,000, her realized loss of $23,000 is not recognized.

b.If Noelle exchanges the car for another car worth $22,000, her realized loss of $23,000 is not recognized.

c.If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss.

So a. b , c are correct.

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