Andrew, an Individual, Began Business Four Years Ago and Has

question 80

Essay

Andrew, an individual, began business four years ago and has never sold a §1231 asset. Andrew owned each of the assets for several years. In the current year, Andrew sold the following business assets:
Assuming Andrew's marginal ordinary income tax rate is 30 percent, what is the character of the gains and losses and what affect do they have on Andrew's tax liability?
$$\begin{array} { | l | r | r | r | } \hline \text { Asset } & \begin{array} { r } \text { Original } \\\text { Cost }\end{array} & \begin{array} { r } \text { Accumulated } \\\text { Depreciation }\end{array} & \text { Gain/Loss } \\\hline \text { Machinery } & \$ 12,000 & \$ 7,000 & \$ 6,000 \\\hline \text { Furniture } & 10,000 & 2,000 & 3,000 \\\hline \text { Building } & 90,000 & 20,000 & ( 5,000 ) \\\hline\end{array}$$

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Definitions:

Sample Weigh-Ins

A methodology or procedure in research and statistics where initial measurements or data collection are carried out to understand a sample’s characteristics before the main analysis.

Confidence Interval

A spectrum of figures, taken from sample observations, possibly enclosing the value of an undetermined population characteristic.

Margin Of Error

An expression of the amount of random sampling error in a survey's results, indicating the confidence in the reliability of the results.

Sample Standard Deviations

A measure that quantifies the amount of variation or dispersion of a set of data values from its sample mean.