During the Current Year,Kayla Recognizes a $40,000 Sec

question 21

Multiple Choice

During the current year,Kayla recognizes a $40,000 Sec.1231 gain on sale of land and a $22,000 Sec.1231 loss on the sale of land.Prior to this,Kayla's only Sec.1231 item was a $10,000 loss six years ago.Kayla is in the 28% marginal tax bracket.The amount of tax resulting from these transactions is

• A)$2,700.
• B)$3,600.
• C)$4,000.
• D)$5,040.

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Definitions:

Employer-paid Retirement Program

A retirement savings plan funded by the employer, contributing to an employee’s retirement benefits.

Warranty Costs

Expenses associated with repairing or replacing products under warranty.

Estimated Warranty Liability

A liability recorded on the financial statements to cover the expected cost of product warranties.

FICA Taxes

Federal Insurance Contributions Act taxes are payroll taxes deducted from employees' paychecks and matched by employers to fund Social Security and Medicare.