Harry Sells an Apartment Building for $117,000

question 64

Multiple Choice

Harry sells an apartment building for $117,000.The building was held as an investment,it cost $95,000 and had an basis of $83,000 at the date of the sale.If Harry is in the 33% marginal tax rate bracket without considering the effect of the sale,how much tax is paid on the gain on the sale of the apartment building?

• A)$5,100
• B)$6,300
• C)$7,300
• D)$8,500

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Definitions:

Title

A legal term referring to the formal right of ownership of property, assets, or a company.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for the goods and the shipping cost as soon as the goods leave the seller's premises.

FOB Destination

A shipping term indicating that the seller bears the shipping costs and retains ownership of the goods until they are delivered to the buyer's location, at which point the buyer takes responsibility.

Ending Merchandise Inventory

Ending merchandise inventory is the value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting sold goods.