Leslie Buys a Sculpture from a Collector for Resale in Her

question 96

Multiple Choice

Leslie buys a sculpture from a collector for resale in her gallery.She purchased the sculpture for $5,000 and sold it 24 months later for $9,000.What are the nature and the amount of the gain on the sale?

• A)$4,000 ordinary income.
• B)$4,000 gain subject to 28% tax rate.
• C)$5,000 ordinary gain and $4,000 Section 1231 gain.
• D)$4,000 Section 1245 gain.

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Definitions:

Generalization

The tendency to respond in the same way to different but similar stimuli, often used in learning theories.

Categorization

The mental process of grouping similar items or ideas together to organize them efficiently.

Discrimination

Discriminatory behavior towards various categories of individuals or things, mainly due to their race, age, or sex.

Biofeedback

A therapeutic technique that teaches individuals to control bodily processes that are normally involuntary, such as heart rate or blood pressure, through the use of electronic or other instruments.