Ira Sells Two of His Personal Automobiles, a Dodge and an Edsel

Multiple Choice

Ira sells two of his personal automobiles, a Dodge and an Edsel, during the current tax year. The Dodge cost Ira $8,000, and the Edsel's cost was $3,000 when they were acquired five years ago. The Dodge is sold for $1,000 on April 20, and the Edsel is sold for $15,000 on July 15. What is the tax treatment of these sales?
I.Both cars are capital assets.
II.The net income tax effect of these sales is zero.
III.Ira must recognize a long-term capital gain of $12,000.
IV.Ira must recognize a net long-term capital gain of $5,000.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Only statements I and III are correct.
D) Only statements I and IV are correct.
E) Only statements I, II, and IV correct.