Albert's Sole Proprietorship Owns the Following Assets

question 4

Multiple Choice

Albert's sole proprietorship owns the following assets. 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.

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Definitions:

Foreign-Currency Exchange

The system or process of converting one national currency into another and determining the exchange rates.

Government Budget Deficit

An economic condition occurring when government expenditures exceed its revenue in a fiscal period.

Interest Rate

The percentage charged or earned on a principal sum of money or an investment over a specified period of time.

Net Capital Outflow

The difference between the domestic purchases of foreign assets and the foreign purchases of domestic assets.