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Answer :
Final answer:
The gain that Zeke will recognize in the current year is calculated by subtracting the adjusted basis of the bus from the total amount he received in the year of sale. Based on the given data, the calculated gain is -$9,600, which is not one of the provided options.
Explanation:
To calculate the gain that Zeke will recognize in the current year from selling the bus, we need to compare the total amount received in the year of sale to the adjusted basis of the bus. The adjusted basis refers to the original cost of an asset adjusted for improvements and depreciation. In this case, Zeke received $4,000 in the current year and the adjusted basis of the bus was $13,600. Thus, the gain Zeke will recognize in the current year can be calculated as follows:
Total receipts in the current year - Adjusted Basis = Gain
$4,000 - $13,600 = -$9,600
However, the options provided do not include -$9,600. Thus, a potential error might have occurred in formulating the problem, and this should be clarified before the correct answer can be provided.
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