Albert's Sole Proprietorship Owns the Following Assets: * Potential

question 42

Multiple Choice

Albert's sole proprietorship owns the following assets: * Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Albert sells his sole proprietorship for $500,000. Calculate Albert's recognized gain or loss and classify it as capital or ordinary.

• A) $230,000 ordinary income.
• B) $230,000 capital gain.
• C) $115,000 ordinary income and $115,000 capital gain.
• D) $110,000 ordinary income and $120,000 capital gain.
• E) None of the above.

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Definitions:

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Simultaneous Change

The occurrence of two or more changes at the same time, often within the same system or process.

Causation

Cause-and-effect linkage between two factors, where one of them causes the other to occur or change.

Cause-and-effect

A relationship where one event (the cause) makes another event happen (the effect).