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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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T2.
Transcribed Image Text: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
O $230,000 ordinary income.
S
20,000
50.000
120.000
80.000
$270.000
$ 60.000
O $230,000 capital gain.
O $115,000 ordinary income and $115,000 capital gain.
O $110,000 ordinary income and $120,000 capital gain.
30.000
90,000
170,000
140.000
Albert sells his sole proprietorship for $500,000. Calculate Albert's recognized gain or loss and classify it as capital or ordinary.
$490.000
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