1. Sue purchased a van for $18000 exclusively for business. She sold it 4 months later for $12500. What is the amount of capital loss, and where on Form 4797 does Sue report the sale?

$3700 loss, Part I

$5500 gain, Part II

$5500 loss, Part II

$5500 loss, Part I

2. What is the proper application of the lower cost or market to value inventory?

Apply the method to inventory as a whole

Apply the method to each item in inventory

Apply the method to average costs of items in inventory

Apply the method to the items of inventory that exceed the average cost of the inventory as a whole.