W Owned and Operated a Printing Shop as a Sole

question 36

Multiple Choice

W owned and operated a printing shop as a sole proprietorship for two decades before selling it to Z.Which statement is true?

• A)W should report the total amount realized, less his total adjusted basis in the business, as a capital gain or loss.
• B)W should report the total amount realized, less his total adjusted basis in the business, as an addition to or a deduction from net income.
• C)W should proportionally allocate the total sales price to each category of property represented among the assets of the business in order to determine the amount of gain or loss for each category.
• D)W and Z should agree on a value for each category of property from which W can subtract the respective adjusted bases in order to determine the amount of gain or loss for each category.

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Definitions:

FTC Rule 433

A regulation also known as the "Holder in Due Course" rule, which protects consumers when they finance the purchase of goods or services.

Defective

Lacking in some necessary quality, faulty, or having defects, making it unfit for its intended use.

Primarily Liable

Being directly responsible for a debt or obligation, without secondary parties to share the liability.

Secondarily Liable

Someone who is secondarily liable holds responsibility to fulfill an obligation if the primary party fails to do so, commonly seen in guarantor or co-signer financial arrangements.