Albert's Sole Proprietorship Owns the Following Assets * Potential § 1245 Recapture of $45,000

question 7

Multiple Choice

Albert's sole proprietorship owns the following assets. $\begin{array}{lrr}&\text { Adjusted Basis Fair }&\text { Market Value }\\\text { Accounts receivable } & \$-0- & \$ 60,000 \\\text { Inventory } & 20,000 & 30,000 \\\text { Machinery and equipment* } & 50,000 & 90,000 \\\text { Buil dings** } & 120,000 & 170,000 \\\text { Land } & 80,000 & 140,000 \\& \$ 270,000 & \$ 490,000\end{array}$ * Potential § 1245 recapture of $45,000. ** Straight-line depreciation was used.
Albert sells his sole proprietorship for $500,000.Calculate Albert's recognized gain or loss and classify it as capital or ordinary.

• A)$230,000 ordinary income.
• B)$230,000 capital gain.
• C)$115,000 ordinary income and $115,000 capital gain.
• D)?$110,000 ordinary income and $120,000 capital gain.

Delineate the scope and limits of an agent's authority and the principal's liability in relation to it.

Identify the various types of authority (actual, implied, and apparent) and how they influence the principal-agent relationship.

Comprehend the duties of principals and agents towards each other, including cooperation, indemnification, and reimbursement.

Understand the roles and legal classifications of individuals within an organization in terms of principals, agents, employees, and independent contractors.

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