Question

Harry sold personal use property for $3,000 that he had purchased for $4,000 and had owned for several years. what tax treatment does he receive with respect to his loss?

a. the loss is deductible as a long-term capital loss
b. the loss is deductible as a short-term capital loss
c. the loss is deductible from ordinary income
d. the loss on the sale of personal use property is non-deductible

Answer 1

Answer: D

Step-by-step explanation:

Answer 2

The loss Harry incurred from the sale of his personal use property is non-deductible for tax purposes, meaning he cannot use this loss to offset other income.

Step-by-step explanation:

The tax treatment Harry receives on the sale of personal use property at a loss is unique. Unlike investment property, losses on the sale of personal use property are generally non-deductible. This means that Harry cannot use the $1,000 loss from the sale of his personal property to offset other income on his tax return. A deductible loss is typically reserved for investment or business property, not items bought for personal use.

The loss Harry has incurred is considered a personal loss, and in the eyes of the tax code, personal losses from the sale of personal use property are not recognized as tax deductions. However, it's important to note that if Harry had sold an investment property or a business asset, the loss may have been eligible for tax deduction as a capital loss.