Suzanne, an individual, began business four years ago and has never sold a §1231

Question

Suzanne, an individual, began business four years ago and has never sold a §1231 asset. Suzanne owned each of the assets for several years. In the current year, Suzanne sold the following business assets:

Assuming Suzanne's marginal ordinary income tax rate is 28 percent, what is the character of the gains and what is Suzanne's tax liability?

Ordinary income

Section 1231 gain

Section 1250 gain

Tax liability

Asset    Original Cost Accumulated Depreciation Gain Machinery $ 12,000 $ 5,000 $ 6,000 Furniture 10,000 2,000 3,000 Building 90,000 20,000 12,000

Explanation / Answer

Ordinary income = 21,000 (6,000+3,000+12,000)

Tax liability = 5,880 (21,000*28%)

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.