Asked by Delynn Smitherman on Jul 22, 2024
Verified
The gain or loss on the sale of property held as an investment is recorded on which one of the following forms or schedules?
A) Form 4797 if the sale was from an asset used for investment purposes by a taxpayer who purchased it with company money as a sole proprietor.
B) Schedule D if the sale was an asset used in a trade or business by a sole proprietor.
C) Schedule D if the sale was an asset used for investment purposes by a taxpayer.
D) Form 4797 regardless if the asset was purchased for investment if the taxpayer is a sole proprietor.
Schedule D
Utilized by taxpayers to report sales or exchanges of capital assets, encapsulating both gains and losses.
Form 4797
A tax form used to report the sale or exchange of business property, encompassing both gains and losses.
Investment Purposes
The intent to allocate resources or capital towards assets anticipated to generate income or profit.
- Familiarize yourself with the tax treatment for transactions involving investment property sales, emphasizing the distinction between ordinary assets and Section 1221 assets.
Verified Answer
MD
Michele DaltonJul 23, 2024
Final Answer :
C
Explanation :
Schedule D is used to report gains or losses from sales of capital assets held for personal use or investment purposes. Form 4797 is used to report gains or losses from the sale of business property, including assets used in a trade or business by a sole proprietor. Therefore, choice A and D are incorrect. Choice B is incorrect because it only applies to assets used in a trade or business, not those held for investment purposes. So, the best choice is C.
Learning Objectives
- Familiarize yourself with the tax treatment for transactions involving investment property sales, emphasizing the distinction between ordinary assets and Section 1221 assets.
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