Assignment:
A taxpayer owns and operates an art gallery with a large inventory of paintings held for sale to customers. She took one of the paintings home and hung it in her dining room. A week later, a dinner guest liked the painting so much that he purchased it at a large profit to the taxpayer. The taxpayer believed that because the painting was displayed at home, it was a personal investment and therefore a capital asset with the profit treated as a capital gain. The painting cost the taxpayer $50,000 and was listed for sale while at the gallery for $90,000. The dinner guest paid $80,000 for the painting. As an IRS agent, how might you react? What tax do you think the IRS agent will assess the taxpayer (assuming the taxpayer faces the top statutory tax rates)?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.