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? $0 $13,000 $15,000 $18,000 none of the above

correct option is $13,000

Explanation:

given data

purchased a classic car = $12,000

fair market value = $10,000

out of pocket costs = $5,000

sells the car = $30,000

to find out

Julia recognized gain or loss on the sale of the car

solution

we know here Proceeds received from the sale of car is = $30,000

so

Adjusted Basis = ( out of pocket expenses incurred for restoration)

Adjusted Basis =  12,000 + 5,000

Adjusted Basis  = $17,000

so

recognized gain = ( Sale price - Acquisition Price)

recognized gain = $30,000  - $17,000

recognized gain = $ 13,000

so correct option is $13,000

oof

explanation:

f

answervulnerability assessment;