Javier purchased a 1972 Dodge Charger in 2011 for $17,000 and a year later he sold it for $21,000. Due to these transactions
A) Javier earned a capital gain of $4,000.
B) Javier earned a capital gain of $21,000.
C) Javier earned a dividend of $17,000.
D) Javier earned a dividend of $21,000.

Question

Quizplus · Accepted Answer

A capital gain is the profit made from the sale of a capital asset, such as a car. Javier purchased the car for $17,000 and sold it for $21,000, resulting in a capital gain of $4,000. Dividends are payments made to shareholders by a company out of its profits, and are not related to the sale of assets by an individual.

Javier Purchased a 1972 Dodge Charger in 2011 for $17,000