Reference no: EM132660226

Problem - In 2019, Bertha Jarow had a $28,000 loss from the sale of a personal residence. She also purchased a patent on a rubber bonding process from an individual inventor for $7,000 (and resold it in two months for $18,000). The patent had not yet been reduced to practice. Bertha purchased the patent as an investment. In addition, she had the following capital gains and losses from stock transactions:

Long-term capital loss ($6,000)

Long-term capital loss carryover from 2018 (12,000)

Short-term capital gain 21,000

Short-term capital loss (7,000)

What is Bertha's net capital gain or loss? Draft a letter to Bertha, explaining the tax treatment of the sale of her personal residence. Assume that Bertha's income from other sources puts her in the 24% bracket. Bertha's address is 1120 West Street, Ashland, OR 97520.