Jeffery, the Owner of a Remodeling Company and a Sole

question 87

Essay

Jeffery, the owner of a remodeling company and a sole proprietor, sold a commercial building he used in his business. He acquired the building on February 15, 2012 for $420,000 and sold it December 30, 2015, for $480,000. Jeffery had taken $41,294 in depreciation. Assume Jeffery is in the 39.6% tax bracket and no other assets were sold in 2015.
a. What is the adjusted basis of the building?
b. What is the amount gain on the sale of the building?
c. How much of the gain is considered unrecaptured 1250 gain?
d. How much of the gain is considered a capital gain?
e. Calculate the tax on the unrecaptured 1250 gain.
f. Calculate the tax on the gain considered to be capital in nature.

Understand the concept and calculation of the weighted average unit contribution margin.

Determine sales dollars necessary to obtain a specific after-tax profit.

Calculate total contribution margin for a period.

Identify break-even points in both dollar sales and units.

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Definitions:

External Inhibition

The decrease in the strength or occurrence of a behavior due to an external stimulus or change in environmental conditions.

Stimulus Discrimination

The ability to distinguish between different stimuli or cues, especially in the context of learning and behavior.

Extinction

In psychology, the gradual weakening and eventual disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Negative Reinforcement

A behavioral principle where the removal of an unfavorable condition strengthens a desired behavior.