Dorothy Operates a Pet Store as a Sole Proprietorship Dorothy Acquired the Building in 1997 for $100,000 of Which

question 9

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:
$$\begin{array} { l r r } & \underline{ \text { Adjusted Basis} } & \underline{ \text { Purchase Price }} \\ \text { Inventory } & \$ 20,000 & \$ 20,000 \\\text { Building } & 60,000 & 105,000 \\\text { Land } & 20,000 & 35,000 \\\text { Equipment } & - 0 - & 30,000 \\\text { Goodwill } & \underline{ - 0 - } & \underline{ 100,000 } \\\text { Total Assets } &\underline{ \$ 100,000} & \underline{ \$ 200,000}\end{array}$$
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:

Troposphere

The lowest layer of Earth's atmosphere, where weather happens and where most of the planet's atmospheric water vapor exists.

Gaseous Molecules

Atoms bonded together that exist in the gas phase, characterized by their ability to fill a container of any size or shape.

Greenhouse Gas

A gas that contributes to the greenhouse effect by absorbing infrared radiation, with carbon dioxide and methane being primary examples, leading to global warming and climate change.

Methane

A potent greenhouse gas with a molecular structure of one carbon atom and four hydrogen atoms, significantly influencing climate change.