of 2irintRequired informationProblem 3-54 (LO 3-5)[The following information applies to the questions displayed below.]Hans runs a sole proprietorship. Hans has reported the following net §1231 gains and losses since he began business. Net$1231 gains shown are before the look-back rule. (Leave no answer blank. Enter zero if applicable.)Year 1Year 2Year 3Year 4Year 5YearYear 6Year 7 (current year)Problem 3-54 Part-aOrdinary incomeNet $1231Gains/(Losses)$(65,000)15,000Saved0010,000050,000a. What amount, if any, of the year 7 (current year) $50,000 net $1231 gain is treated as ordinary income?

Section 1231 deals with the tax on a gain from the sale of a depreciable business property that has…

Answered: a. What amount, if any, of the year 7…

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a. What amount, if any, of the year 7 (current year) $50,000 net $1231 gain is treated as ordinary income?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

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