Brandon,an Individual,began Business Four Years Ago and Has Sold §1231

question 15

Multiple Choice

Brandon,an individual,began business four years ago and has sold §1231 assets with $5,000 of losses within the last 5 years.Brandon owned each of the assets for several years.In the current year,Brandon sold the following business assets: $\begin{array}{lccc}&&\text { Accumulated }\\\text {Asset}&\text { Original Cost } & \text { Depreciation } & {\text { Gain/Loss }} \\\text {Machinery}&\$ 30,000& \$7,000 & \$ 10,000 \\\text {Land}&40,000 & 0 & 20,000 \\\text {Building}&90,000 & 20000 & (5,000) \end{array}$ Assuming Brandon's marginal ordinary income tax rate is 32 percent,what effect do the gains and losses have on Brandon's tax liability?
Use Dividends and Capital Gains Tax Rates for reference.

• A)$25,000 ordinary income,$8,000 tax liability.
• B)$25,000 §1231 gain and $3,750 tax liability.
• C)$13,000 §1231 gain,$12,000 ordinary income,and $5,790 tax liability.
• D)$12,000 §1231 gain,$13,000 ordinary income,and $5,960 tax liability.
• E)None of the choices are correct.

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The process by which individuals select environments or experiences that complement their inherited tendencies or skills.

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Inclinations or predispositions for certain traits or behaviors influenced by genes.

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