T2. Albert's sole proprietorship owns the following assets.Accounts receivableInventoryMachinery and equipment*Buildings**Land*Potential § 1245 recapture of $45,000.** Straight-line depreciation used.Adjusted Basis Fair Market ValueO $230,000 ordinary income.S20,00050.000120.00080.000$270.000$ 60.000O $230,000 capital gain.O $115,000 ordinary income and $115,000 capital gain.O $110,000 ordinary income and $120,000 capital gain.30.00090,000170,000140.000Albert sells his sole proprietorship for $500,000. Calculate Albert's recognized gain or loss and classify it as capital or ordinary.$490.000

Profit/loss arising from sale of property is regarded as Capital Gain / Capital loss. The…

Albert's sole proprietorship owns the following assets. Accounts receivable Inventory Machinery and equipment* Buildings** Land Potential § 1245 recapture of $45,000. ** Straight-line depreciation used. Adjusted Basis Fair Market Value S 20,000 50.000 120,000 80.000 $270,000 $ 60.000 O $230,000 ordinary income. O $230,000 capital gain. $115,000 ordinary income and $115,000 capital gain. O $110,000 ordinary income and $120,000 capital gain. 30,000 90,000 170.000 140.000 $490,000 Albert sells his sole proprietorship for $500,000. Calculate Albert's recognized gain or loss and classify it as capital or ordinary.

Albert's sole proprietorship owns the following assets. Accounts receivable Inventory Machinery and equipment* Buildings Land Potential § 1245 recapture of $45,000. Straight-line depreciation used. Adjusted Basis Fair Market Value S 20,000 50.000 120,000 80.000 $270,000 $ 60.000 O $230,000 ordinary income. O $230,000 capital gain. $115,000 ordinary income and $115,000 capital gain. O $110,000 ordinary income and $120,000 capital gain. 30,000 90,000 170.000 140.000 $490,000 Albert sells his sole proprietorship for $500,000. Calculate Albert's recognized gain or loss and classify it as capital or ordinary.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter17: Property Transactions: § 1231 And Recapture Provisions

Section: Chapter Questions

Problem 37P

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