Proctor Inc

question 111

Multiple Choice

Proctor Inc. was incorporated in 2012 and adopted a calendar year. Here is a schedule of Proctor's net Section 1231 gains and (losses) reported on its tax returns through 2017.
In 2018, Proctor recognized a $25,000 gain on the sale of business land. How is this gain characterized on Proctor's tax return?

• A) $25,000 Section 1231 gain.
• B) $19,700 ordinary gain and $5,300 Section 1231 gain.
• C) $15,900 ordinary gain and $9,100 Section 1231 gain.
• D) $25,000 ordinary gain.

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Definitions:

Income Statement

A financial statement that summarizes revenues, expenses, and profits or losses of a business for a specific period.

Financial Statement

A document that presents a detailed financial status of a company, including balance sheets, income statements, and cash flow statements, at a specific point in time.

Normal Balance

The side (debit or credit) where the balance of an account usually increases.

Account Category

A classification within accounting used to group similar types of accounts, such as assets, liabilities, equity, revenue, and expenses.