Last year on March 2, Julie purchased her first car for $7,000. It was a...
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Last year on March 2, Julie purchased her first car for $7,000. It was a classically restored MG convertible. She loves it. While she was at the gas station on the 4th of July a middle-aged man approached her and complimented the car and said, I will pay you $12,000 for your car. While Julie loved her MG, she also recognized that this guy was a little more in love with her car than she was, so she agreed to the transaction. What is the amount and type of Julies realized gain and recognized gain on the transaction? If it is reported on Julies tax return, how will it be reported?
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