Clarise Bought a Building Three Years Ago for $180,000 to Use

question 71

Multiple Choice

Clarise bought a building three years ago for $180,000 to use in her business.The straight-line method of depreciation was used and $15,000 of depreciation deductions were allowed.During the current year,Clarise sells the building to her wholly owned corporation for $235,000.The tax results to Clarise are

• A)$70,000 ordinary income.
• B)$70,000 of Sec.1231 gain.
• C)$55,000 ordinary income and $15,000 Sec.1231 gain.
• D)$15,000 of ordinary income and $55,000 Sec.1231 gain.

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Definitions:

Board of Directors

A group of individuals elected to represent shareholders and make governing decisions on behalf of a corporation.

Enforcement Rights

The legal ability to ensure compliance or to compel individuals or entities to adhere to agreed terms, laws, or obligations.

Shareholder's Interest

The stake or concern a shareholder has in the success and well-being of a company, often reflected by the value of their shares.

Investor Protection and Securities Reform Act

Legislation aimed at improving regulatory provisions for securities to protect investors against fraud, ensuring transparency and fairness in the market.