A loss from the sale of a personal use asset that would be disallowed cannot be recognized even if the taxpayer converts the asset to business use prior to its sale.

Question

Quizplus · Accepted Answer

This is because the disallowance of loss on the sale of a personal use asset is based on the fact that it is a capital loss, and capital losses cannot be recognized for tax purposes when they arise from the sale of personal use assets. Converting the asset to business use does not change this fact.

A Loss from the Sale of a Personal Use Asset