Charmine, a Single Taxpayer with No Dependents, Has Already Incurred

question 136

Essay

Charmine, a single taxpayer with no dependents, has already incurred a $10,000 § 1231 gain in 2018 and has no §1231 lookback losses. The taxpayer purchased a business machine for $100,000 five years ago, $70,000 of depreciation has been taken on it, and the machine is now worth $90,000. How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $352,000 of taxable income which does not include a $10,000 § 1231 gain or any capital gains or losses, what is her taxable income?

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Definitions:

Public Involvement

The participation of ordinary citizens in the political, decision-making, or other relevant processes within their community or country.

Three-Strikes Legislation

A legal principle mandating harsher sentences on offenders who are convicted of three or more serious criminal offenses.

Selective Incapacitation

A criminal justice policy focusing on identifying and incapacitating individuals who are deemed to be especially dangerous or high-risk.

Mass Imprisonment

The substantial increase and widespread practice of incarcerating a large portion of the population, often critiqued for its social and economic impacts.