Blair,whose Tax Rate Is 28%,sells One Tract of Land at a Gain

question 23

Multiple Choice

Blair,whose tax rate is 28%,sells one tract of land at a gain of $29,000 and another tract of land at a gain of $11,000.Both tracts of land are Sec.1231 property.She has never had any other Sec.1231 transactions.How are the gains taxed?

• A)ordinary income of $40,000 taxed at 28%
• B)a net capital gain of $40,000 which is not taxed
• C)a net capital gain of $40,000 taxed at 15%
• D)ordinary income of $40,000 taxed at 25%

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Definitions:

Financial Calculator

A specialized calculator used for financial matters, including calculating interests, loans, investments, amortization, and profit and loss.

Compounded Annually

Interest that is calculated and added to the principal balance once a year.

Compounded Monthly

Involves the addition of interest to the principal sum of a loan or deposit on a monthly basis.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, with tax benefits for retirement savings.