Question

Talbot purchased a laptop for $1,500 and a television for $1,300. The laptop is used solely for business and the television solely for personal entertainment. During the same year, Talbot experienced serious financial difficulty and sold the television for $300 and the laptop for $1,000. What amount, if any, is Talbot entitled to deduct as a loss relating to the sale of the television and laptop?
A. $0
B. $500
C. $1,000
D. $1,500

Answer 1

Answer:

B. $500

Explanation:

Talbot entitled to deduct as a loss relating activities associated with the business and not those for personal use as the business is considered to be  a separate legal entity from the owner or promoter.

As such, the only loss to be considered is the loss from the laptop since it is used solely for business and not the television which is used for personal use.

Cost of laptop = $1,500

Selling price = $1,000

Loss = $1,500 - $1,000

        = $500

The answer is B. $500