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

question 631

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

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Definitions:

Hockey Pucks And Hockey Sticks

Items used in the sport of hockey, with the puck being the object teams attempt to score with, and the stick used to hit the puck.

Necessity

A good or service that is essential for survival and basic well-being, such as food or shelter.

Price-Inelastic

Describes a situation where the demand for a product or service is relatively unaffected by changes in its price.

Water

A transparent, tasteless, odorless, and nearly colorless chemical substance that is the main constituent of Earth's hydrosphere and the fluids of most living organisms.