The following assets in Jack's business were sold in 2012: The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2012 (the year of sale),Jack should report what amount of net capital gain and net ordinary income?
A) $1,700 LTCG.
B) $600 LTCG and $300 ordinary gain.
C) $1,400 LTCG and $300 ordinary gain.
D) $2,500 LTCG and $800 ordinary loss.
E) None of the above.

Question

The following assets in Jack's business were sold in 2012:  The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2012 (the year of sale),Jack should report what amount of net capital gain and net ordinary income?
A) $1,700 LTCG. 
B) $600 LTCG and $300 ordinary gain. 
C) $1,400 LTCG and $300 ordinary gain. 
D) $2,500 LTCG and $800 ordinary loss. 
E) None of the above.

Quizplus · Accepted Answer

- The office equipment had a zero adjusted basis and was sold for $8,000, resulting in a $8,000 ordinary gain.
- The automobile was purchased for $2,000 and sold for $1,200, resulting in a $800 ordinary loss.
- The ABC stock was purchased for $1,800 and sold for $3,200, resulting in a $1,400 long-term capital gain.
Net capital gain = $1,400
Net ordinary income = $8,000 - $800 = $7,200, which includes the $1,800 ordinary gain from the ABC stock sale.

The Following Assets in Jack's Business Were Sold in 2012