Mitch, an NRA, Sells a Building in Omaha for $1

question 64

Multiple Choice

Mitch, an NRA, sells a building in Omaha for $1 million. His basis in the building is zero for both regular tax and AMT purposes. Mitch has no other contact with the U.S. other than the ownership of the building. How much Federal income tax is due from Mitch on the sale?

• A)$0, he is an NRA.
• B)The amount realized times the top individual tax rate.
• C)The net gain times the top capital gains tax rate.
• D)The net gain taxed at the lesser of the applicable regular or AMT rates.

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Definitions:

NAFTA

The North American Free Trade Agreement, an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.

Trade Barriers

Restrictions imposed by a government on international trade, often to protect domestic industries from foreign competition.

Foreign Sovereign Immunities Act

U.S. legislation that sets the limitations as to whether a foreign sovereign nation (and its political subdivisions, agencies, or instrumentalities) may be sued in U.S. courts.

U.S. Citizens

Individuals who are legally recognized as members of the United States, either by birth or naturalization, with specific rights and obligations.