Ira sells two of his personal automobiles, a Dodge and an Edsel, during the current tax year. The Dodge cost Ira $8,000, and the Edsel's cost was $3,000 when they were acquired five years ago. The Dodge is sold for $1,000 on April 20, and the Edsel is sold for $15,000 on July 15 . What is the tax treatment of these sales?
I. Both cars are capital assets.
II. The net income tax effect of these
sales is zero.
III. Ira must recognize a long-term capital gain of $12,000.
IV. Ira must recognize a net long-term capital gain of $5,000.
a. Only statement I is correct.
b. Only statement II is correct.
c. Only statements I and III are correct.
d. Only statements I and IV are correct.
e. Only statements I, II, and IV correct.
c
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