Ross Purchased a Building in 1985,which He Uses in His

question 25

Multiple Choice

Ross purchased a building in 1985,which he uses in his manufacturing business.Ross uses the ACRS statutory rates to determine the cost-recovery deduction for the building.Ross's original cost for the building is $500,000 and cost-recovery deductions allowed are $500,000.If the building is sold for $340,000,the tax results to Ross are

• A)$340,000 LTCG.
• B)$340,000 Sec.1231 gain.
• C)$340,000 Sec.1245 ordinary income.
• D)$340,000 Sec.1250 ordinary income.

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Definitions:

Overhead Cost

Expenses related to the operation of a business that cannot be directly linked to a specific product or service.

Customer Margin

The profit generated from a particular customer, calculated by subtracting the costs directly associated with serving them from the revenue they generate.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities and resources that contribute to their creation and delivery.

Activity Cost Pools

Groupings of individual costs based on the activities that drive them, used in activity-based costing to allocate costs more accurately.