Noelle owns an automobile which she uses for personal use.Her adjusted basis is $40,000 (i.e. ,the original cost).The car is worth $24,000.Which of the following statements is correct?
A)If Noelle sells the car for $24,000,her realized loss of $16,000 is not recognized.
B)If Noelle exchanges the car for another car worth $24,000,her realized loss of $16,000 is not recognized.
C)If the car is stolen and it is uninsured,Noelle may be able to recognize part of her realized loss of $24,000.
D)Only a.and b.are correct.
E)a. ,b. ,and c.are correct.

Question

Quizplus · Accepted Answer

If Noelle sells the car for $24,000, her realized loss of $16,000 is not recognized because the loss is not realized until the car is sold. If Noelle exchanges the car for another car worth $24,000, her realized loss of $16,000 is not recognized because the exchange is a like-kind exchange. If the car is stolen and it is uninsured, Noelle may be able to recognize part of her realized loss of $24,000 if she can prove that the car was stolen.

Noelle Owns an Automobile Which She Uses for Personal Use