Hi, I am having difficulty with this question and I have narrowed it down to two

Question

Hi, I am having difficulty with this question and I have narrowed it down to two possible answers but I am still confused.

Trudy Holiday has been selliing greeting cards or several years as a sole properietor. In May of Year 3, she purchased land a building to use in the greeting card business. In October of Year 3, she sold the entire business, including inventory held since Year 1 and the land and building. Turdy's automobile, used exclusively in her business and purchased in Year 1, was swallowed by a sinkhole before the sale in Year 3. Which of the following is a Sec. 1231 asset?

A. The automobile

B. The land

Explanation / Answer

Answer is A.

Sec.1231 delas with assets which are altleast one year old.

Since the land and building are purchased on May of Year 3 and are sold in the same year they are not covered under Sec.1231 assets.

In the case of the automobile this has been in use from Year 1, therefore automobile is a Sec.1231 asset.

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