Question

Rebecca sells her personal scooter for $550. She purchased the scooter for $700 three years ago. She also sells a painting for $1,200 which she acquired five years ago for $900.
1. Rebecca has a $ _________ realized loss on the scooter and a $ ____________ realized gain on the painting. Rebecca only will recognize the gain or loss associated with the painting.

Answer 1

Answer:

Rebecca has a $150 realized loss on the scooter and a $300 realized gain on the painting

Explanation:

The question when looked from a taxation point of view centers on capital gains.Capital gains are gains on which a company or an individual pays capital gains tax upon disposal of their assets .

Since Rebecca bought the scooter for $700 but disposed of at $550 , it follows that Rebecca received $150 less from the purchaser, which is the realized loss on scooter's sale.

Also, the proceeds received by Rebecca on the painting was $300 much more than the cost of the painting,this refers to the gains recorded upon outright sale of the painting