Charmine, a Single Taxpayer with No Dependents, Has Already Incurred

question 50

Essay

Charmine, a single taxpayer with no dependents, has already incurred a $10,000 § 1231 gain in 2019 and has no §
1231 lookback losses.She purchased a business machine for $100,000 five years ago; $70,000 of depreciation has been taken on it, and the machine is now worth $90,000.How will the net § 1231 gain or loss be affected if Charmine trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $352,000 of taxable income, which does not include a $10,000 § 1231 gain or any capital gains or losses, what is her taxable income?

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Definitions:

Lever

A rigid bar resting on a pivot, used to help move a heavy or firmly fixed load with one end when pressure is applied to the other.

Food Pellet

A compressed unit of food, often used in animal feeding, which is designed for easy storage, handling, and consumption.

Conditioning

A process of behavioral modification by which a subject comes to associate a desired behavior with a previously unrelated stimulus.

Diverse Work Environment

A workplace that includes a wide range of differences among its employees, including race, gender, ethnicity, sexual orientation, age, and abilities.