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Here's a scenario: If Bob purchased a car for personal use for $12,000 in 2000 and sells that car for $1,000 this year, will he be required to recognize the $1,000 as income under the all-inclusive income concept on his tax return?
-- John
Dear John,
We've got good news and bad news for your friend Bob. The good news is no, he won't have to recognize the $1,000 as income on his tax return. The bad news is he lost money on his transaction -- $11,000. If Bob had sold the car for more than what he originally paid, then he would need to report the profit as a capital gain.
And just in case you were wondering if Bob can take an $11,000 loss on the sale of his car this year, the answer is no. The tax laws do not allow individuals to claim losses from the sale of personal property.
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