Booth Corporation Sells a Building Classified as a Residential Rental

question 15

Multiple Choice

Booth Corporation sells a building classified as a residential rental property for $200,000. The MACRS straight-line depreciation taken is $20,000 and the adjusted basis of the building is $170,000. Booth Corporation must recognize ordinary income of

• A)$30,000.
• B)$20,000.
• C)$4,000.
• D)$0.

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Definitions:

Tandem Drive Axle

A configuration in heavy-duty vehicles where two drive axles are placed in close proximity to distribute the load more evenly across the wheels.

Power Divider

A component in vehicle drivetrains, particularly in heavy trucks, used to distribute power evenly across multiple axles.

Forward Differential

A differential gear arrangement that allows the driven wheels to rotate at different speeds, typically located at the front of vehicles with front-wheel drive.

Drive Torque

The force that causes rotation in a vehicle, typically measured at the drive wheels, which directly impacts acceleration.