Question

In 2019, Kelsey sustained a loss on the theft of a painting. She had paid $20,000 for the painting, but it was worth $40,000 at the time of the theft. What are the tax consequences of treating the painting as (a) investment property or as (b) personal use property? a. If the painting is treated as investment property, the loss is . Before adjustments (if any), the loss is limited to the of the property at the time of destruction. b. If the painting is treated as personal-use property, the loss is . Before adjustments (if any), the loss is limited to the o

Answer 1

Solution and Explanation:

As per capital gains, painting is treated as capital asset. Hence, theft of painting is a dead loss means no tax treatment.

A capital resource might be said to incorporate such things as property, regardless of whether mobile or unflinching, fixed or flowing, or substantial or elusive. Different instances of capital resources may incorporate structures, hardware, PC gear, vehicles. In straightforward terms everything that you claim or use for individual or speculation purposes can be named as a capital resource.  

A non capital resource incorporates business property. The things which may go under non capital resource incorporates stock, stock in exchange, and some other sort of property that you hold exclusively with the end goal of offer to clients in your business or exchange. In basic terms a non capital resource is property that is certainly not a capital resource.