Question

1. Emily, whose tax rate is 32%, owns an office building which she purchased for $900,000 on March 18 of last year. The building is sold for $950,000 on February 20 of this year when the adjusted basis of the building was $876,000. The tax results to Emily are

A) $74,000 1231 gain taxed at 15%.

B) $74,000 ordinary income taxed at 32%.

C) $24,000 1250 unrecaptured gain taxed at 25% and $50,000 1231 gain taxed at 15%.

D) $24,000 1231 gain taxed at 15% and $50,000 ordinary income taxed at 32%.

2. Yakov and Juliana are married and file a joint return for 2018 with taxable income of $100,000 and tax preferences and adjustments of $20,000 for AMT purposes. Their regular tax liability is $13,879. What is the amount of their total tax liability?

A) $7,248

B) $9,230

C) $13,879

D) $25,708

Answer 1

Ans.1 Q)- It is a short term capital gain and will be chargaeable at normal tax rate @ 32%

Hence option B is correct