On March 3, 2015, Craig Bought a Business-Use Vehicle for $20,000

Multiple Choice

On March 3, 2015, Craig bought a business-use vehicle for $20,000. He used the vehicle for three years and properly deducted a total of $12,000 as depreciation expense during this period. At the end of 2018, Craig sells the vehicle for $7,500. Why is Craig's deductible loss $500?
I.Craig has already recovered $12,000 of his investment through the depreciation deduction.
II.The adjusted basis of the vehicle was $12,000 at the date of sale.
III.$7,500 of the adjusted basis was recovered because of the sale.
IV.The realized loss is recognized because it was incurred with business-use property.
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A) Statements I and III are correct.
B) Statements I, III and IV are correct.
C) Statements II and III are correct.
D) Only statement IV is correct.
E) Statements I, II, III, and IV are correct.