Yelenis, Whose Tax Rate Is 28%, Sells One Sec $$\begin{array} { | l | l | l | } \hline 15 \% & 25 \% & 28 \% \\\hline \$ 20,000 & \$ 16,000 & \$ 0 \\\hline\end{array}$$

question 23

Multiple Choice

Yelenis, whose tax rate is 28%, sells one Sec. 1231 asset this year, resulting in a $50,000 gain. Included in the $50,000 Sec. 1231 gain is $30,000 of unrecaptured Sec. 1250 gain. A review of Yelenis tax files for the past five years indicates one prior Sec. 1231 sale which resulted in a $14,000 loss. The gain will be taxed as

• A) \[\begin{array} { | l | l | l | }
• \hline 15 \% & 25 \% & 28 \% \\
• \hline \$ 20,000 & \$ 16,000 & \$ 0 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | l | }
• \hline 15 \% & 25 \% & 28 \% \\
• \hline\$ 20,000 & \$ 16,000 & \$ 14,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | l | }
• \hline 15 \% & 25 \% & 28 \% \\
• \hline \$ 6,000 & \$ 30,000 & \$ 0 \\
• \hline
• \end{array}\]
• D) \(\begin{array}{|l|l|l|}
• \hline15 \% & 25 \% & 28 \% \\
• \hline \$ 6,000 & \$ 30,000 & \$ 14,000 \\
• \hline
• \end{array}\)

Comprehend various anti-poverty strategies and welfare reforms, including their potential disadvantages, like work disincentives.

Realize the economic reasoning behind taxation and subsidies through mathematical examples.

Understand the role of utilitarian arguments in shaping public policy towards income redistribution.

Grasp the principle and implications of different types of income (permanent, life-cycle, and transitory).

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