In the Current Year, Tim Sells Section 1245 Property for $28,000

question 96

Multiple Choice

In the current year, Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago. Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000. How much of the gain is taxable as ordinary income?

• A)$7,000
• B)$8,000
• C)$13,000
• D)$18,000
• E)None of the above is correct

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Definitions:

Socially Optimal

A state of the market where resources are allocated in the most efficient manner, maximizing the overall benefit to society.

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An economic situation where a third party is negatively affected by the outcome of a transaction or activity, for instance, pollution affecting the health of nearby residents who are not involved in the polluting activity.

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The act of operating a motor vehicle while the driver's ability to do so is impaired by the effects of consuming alcohol.

Used Oil

Recycled or waste oil that has been used and then collected for reprocessing or disposal, often considered hazardous waste.