Dontrell Sells a Building Used in His Business at a Gain

question 29

Multiple Choice

Dontrell sells a building used in his business at a gain of $20,000. The building was purchased in 2006, and $15,000 of depreciation had been deducted on the building to the date of sale. Dontrell's marginal tax rate is 32% without considering these two transactions. As a result of these transactions
I.Dontrell will pay additional tax of $4,500.
II.The building is Section 1245 property.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Railroads

Land transport routes using a series of tracks and stations for the movement of trains to transport passengers and goods.

Industrial Regulation

Governmental regulation of industries to ensure competition, control prices, prevent monopolies, and protect consumers.

Social Regulation

A form of government intervention in the private sector that aims to protect public welfare, health, safety, and the environment.

Costs Of Production

The total expenses incurred by a company to manufacture a product or provide a service, including materials, labor, and overhead.