Liam Used His Auto 70 Percent for Business and 30

question 24

Multiple Choice

Liam used his auto 70 percent for business and 30 percent for personal use.He purchased it for $15,000 and has taken $5,460 of depreciation on it.What is his recognized gain on a sale for $12,000 and what is its character?

• A)$2,940 Section 1231 gain
• B)$3,360 Section 1245 ordinary income
• C)$5,460 Section 1245 ordinary income
• D)$6,540 Section 1231 gain

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Definitions:

Import Duties

Taxes imposed by a government on goods and services imported into its territory to regulate trade and raise revenue.

Transfer Pricing

The pricing of goods, services, and intangibles between affiliated entities that may cross international borders, often used to allocate income among different tax jurisdictions.

Transfer Price

The cost at which products and services are exchanged between departments within the same organization.

Tax Rate

The percentage at which an individual or corporation's income is taxed by the government.