Dorothy Operates a Pet Store as a Sole Proprietorship

question 94

Essay

Dorothy operates a pet store as a sole proprietorship.During the year she sells the business to Florian for $200,000.The assets sold and the allocation of the purchase price are as follows:
Dorothy acquired the building in 1997 for $100,000 of which $20,000 was allocated to the land.She paid $40,000 for the equipment in the same year.What are the tax consequences of the liquidation for Dorothy?

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Definitions:

Blood Clotting

The process that prevents excessive bleeding when the vascular system is injured, involving the transformation of blood from a liquid to a gel.

Incomplete Dominance

A condition in which neither member of a pair of contrasting alleles is completely expressed when the other is present.

Heterozygous

A genetic condition where an individual has two different alleles at a gene locus.

Intermediate Phenotype

A phenotype that represents a blend or a combination of two extreme phenotypic traits or forms found in a population.