Andrew, an Individual, Began Business Four Years Ago and Has

question 60

Essay

Andrew, an individual, began business four years ago and has never sold a §1231 asset. Andrew owned each of the assets for several years. In the current year, Andrew sold the following business assets: $$\begin{array} { | l | r | r | r | } \hline { \text { Asset } } & \text { Original Cost } & \begin{array} { c } \text { Accumulated } \\\text { Depreciation }\end{array} & \text { Gain/Loss } \\\hline \text { Machinery } & \$ 12,000 & \$ 7,000 & \$ 6,000 \\\hline \text { Furniture } & 10,000 & 2,000 & 3,000 \\\hline \text { Building } & 90,000 & 20,000 & ( 5,000 ) \\\hline\end{array}$$ Assuming Andrew's marginal ordinary income tax rate is 30 percent, what is the character of the gains and losses and what affect do they have on Andrew's tax liability?

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Definitions:

Symbolic Interactionism

A sociological perspective that examines how individuals interpret and give meaning to social interactions, and how these interpretations influence behavior.

Symbolic Environment

An environment composed of symbols and social meanings, including language, media, and culture, through which individuals interpret and give meaning to the world around them.

Interpretations

The act of explaining the meaning of something; understanding or conceptualization based on one's own perspective or knowledge.

Meaning

The significance, explanation, or understanding of something; the communicated, intended, or implied message.