Ms. Drake sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Accounts receivable: 42,250 Inventory: 149,600 Furniture and Equipment: 63,750 Accumulated Depreciation: (51,000) Leashold Improvements: 23,000 Accumulated Amortization: (4,600) The purchaser paid a lump-sum price of $316,500 cash for the business. The sales contract stipulates that the FMV of the business inventory is $154,000, and the FMV of the remaining balance sheet assets equals adjusted tax basis. Assuming that Ms. Drake’s marginal tax rate on ordinary income is 35 percent
Ms. Drake sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business
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