Albert purchased a tract of land for $240,000 in 2012 when he heard that a new h

Question

Albert purchased a tract of land for $240,000 in 2012 when he heard that a new highway was going to be constructed through the property and that the land would soon be worth $300,000 Highway engineers surveyed the property in 2013 and indicated that he would probably get $280,000 if he sold it at that time. The highway project was abandoned in 2015 and the value of the land fell to $200,000. What is the amount of loss Albert can deduct on his tax return in 2015? Alicia buys a beach house for $325,000 which is not her principal residence. She builds an additional u house foe $45,000. She sells the property for $450,000 and pays $26,000 in commissions (selling expenses) in connection with the sale. What is her recognized gain on the sale of the house? Kimmy sells her personal use automobile for $19,000. She purchased the car three years ago for $35,000. What is Kimmy's recognized gain or loss?

Explanation / Answer

10. Amount of loss on tax return = $240,000 - $200,000

= $40,000 which option (b)

11. Recognised gain on sale of the house = $450,000 - $325,000 - $45,000 - $26,000

= $54,000 which is option (a)

12. Recognized gain or loss = $19,000 - $35,000

= -$16,000 which option (c)

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