Brandon,an Individual,began Business Four Years Ago and Has Never Sold

question 82

Multiple Choice

Brandon,an individual,began business four years ago and has never sold a §1231 asset.Brandon owned each of the assets for several years.In the current year,Brandon sold the following business assets: Assuming Brandon's marginal ordinary income tax rate is 32 percent,what effect do the gains and losses have on Brandon's tax liability?

• A)$7,000 ordinary income,$1,000 §1231 loss,and $1,920 tax liability.
• B)$6,000 ordinary income and $1,920 tax liability.
• C)$7,000 §1231 gain and $2,240 tax liability.
• D)$7,000 §1231 gain and $1,050 tax liability.
• E)None of the choices are correct.

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Definitions:

Statute of Frauds

A legal provision requiring certain types of contracts to be written and signed to be enforceable.

Discharged Debt

A debt that has been fully paid off or legally settled, releasing the debtor from further obligations.

Bankruptcy

A legal process for individuals or businesses that cannot repay their outstanding debts, allowing them to be relieved of their debt obligations under the protection of law.

Industry Standards

Industry standards refer to the established norms and technical specifications followed by companies in a particular sector to ensure quality, safety, and interoperability.