Katrina owns a successful small business. During the current year Katrina sells certain business assets as set forth in the table below: Assets sold (all previously used in her business) Asset Sales Price Original Basis Accumulated Depreciation Gain/Loss Character of Gain/Loss Building $450,000 $500,000 $280,000 Equipment $ 75,000 $ 40,000 $ 25,000 Truck $ 10,000 $ 25,000 $ 25,000 Land $640,000 $770,000 N/A Computers $ 80,000 $100,000 $100,000 Katrina is single and is in the 37% marginal income tax bracket for ordinary income and the 20% tax bracket for long-term capital gain and preferentially taxed income. Assume Katrina had not previously sold any section 1231 assets. Complete the table above and then provide your answer for what Katrina’s overall income tax liability will be for the above transactions.
Katrina owns a successful small business. During the current year Katrina sells certain business assets as set forth in the table below: Assets sold (all previously used in her business) Asset Sales Price Original Basis
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