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vlabodo [156]
3 years ago
8

Bailey stood in line for hours and purchased the new game system the day it became available for $600. Knowing that there was a

high demand for the game system and a limited supply, she decided to put the item on E-bay rather than keep it. She sold it for $950. She also sold her five-year old car for $5,000. She had purchased the car for $13,000. What is the taxable nature of these transactions? Multiple choice question. Bailey has a taxable short-term capital gain of $350 and a deductible long-term capital loss. Bailey has no tax consequences for these transactions because the assets sold were "personal use" assets. Bailey has a taxable short-term capital gain of $350, but no deductible loss for the car. Bailey does not have to pay tax on the game system, but she deductible long-term capital loss.
Business
1 answer:
Evgen [1.6K]3 years ago
3 0

Answer:

Bailey has a taxable short-term capital gain of the amount of $350, but no deductible loss for the car.

Explanation:

Based on the information given In a situation where Bailey purchased the new game system for the amount of $600 in which it was sold for the amount of $950. Which means that the taxable nature of these transactions is that she has a TAXABLE SHORT-TERM CAPITAL GAIN of the amount of $350, which is calculated as ($950-$600) while on the other hand their won't be any deductible loss amount for the car.

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A. Maximize the market value of the equity.

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Explanation: A sole proprietorship is generally owned by an individual. Therefore there is a usually a limitation to how much funds that can be invested in the business.

What this means is that this form of business is very simple and restrictive with regards to equity financing. In other words, equity financing is usually limited to the amount of funds that the sole proprietor is willing to invest in the business.

This is where good financial management comes in, this is to ensure that the invested equity bears fruit, and achieves high market value in order to yield revenue.

Lack of proper management and the invested equity will be squandered.

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