Question

Bennett purchased a tract of land for $20,000 in 2012 when he heard that a new highway was going to be constructed through the property and the land would soon be worth $200,000. The highway project was abandoned in 2018 and the value of the land fell to $15,000. Bennett can claim a loss in 2018 of:

Answer 1

Answer:

The correct answer to this question is that the amount of loss suffered by Bennett cannot be taken out because no information has been given in the question regarding sale of the land.

Explanation:

In the given above question Bennett purchased a tract of land for $20,000 in 2012, thinking that the value of land would increase to $200,000 when the new highway would be constructed but that didn't happen and the value of the property fell to $15,000. Here we can't tell anything about the loss suffered by Bennett because there has been no information given regarding the selling of the land and if he hasn't sold the land then that means there is no loss.

If he would have sold the land then he would have suffered a loss of $5000($20,000 -$15,000).