TP owns and operates a resort hotel in a small town. As a courtesy to his custom
ID: 2523734 • Letter: T
Question
TP owns and operates a resort hotel in a small town. As a courtesy to his customers, TP owns a passenger van which he uses to pick-up and deliver customers to and from the local airport.
TP purchased the passenger van for $50,000 several years ago. This year, TP sold the passenger van for $20,000 so he could purchase a brand new larger van. At the time of the sale, TP had claimed $42,500 as depreciation deductions attributable to the passenger van.
Assume that instead of selling the passenger van, TP gave the van to his brother as a gift. His brother used the van for personal purposes and sold it two years later for $60,000. How much gain, if any, did TP's brother realize when he sold the van?
Select one:
A. 0
B. $10,000
C. $50,000
D. $52,500
Explanation / Answer
Answer is Option D. $52, 500
Explaination-
A. Cost of Van when TP bought $50,000 LESS: Depreciation claimed $42,500 B. Value of Van at the time of gift to TP's brother $7,500 C. Selling value after two years $60,000 D. difference is Gain ( C less B) $52,500Related Questions
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