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:

Straight-Line Method

A method of allocating the cost of an asset evenly over its useful life for the purposes of depreciation.

Salvage Value

The estimated resale value of an asset at the end of its useful life, considered in depreciation calculations.

Depreciation

The planned apportionment of a tangible asset's cost over the time it is useful.

Salvage Value

The estimated resale value of an asset at the end of its useful life, important for depreciation calculations.