Required information [The following information applies to the questions displayed below.] Aruna, a sole proprietor, wants to sell two assets that she no longer needs for her business. Both assets qualify as §1231 assets. The first is machinery and will generate a $23,500 §1231 loss on the sale. The second is land that will generate a $13,900 §1231 gain on the sale. Aruna's ordinary marginal tax rate is 32 percent. Note: Input all amounts as positive values. b. Assuming that Aruna sells the land in December of year 1 and the machinery in January of year 2, what effect will the sales have on Aruna's tax liability for each year? Aruna's tax will Aruna's tax will decrease increase in year 1 by in year 2 by $ $ 7,520 2,085

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter2: Income Tax Concepts
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Required information
[The following information applies to the questions displayed below.]
Aruna, a sole proprietor, wants to sell two assets that she no longer needs for her business. Both assets qualify as §1231
assets. The first is machinery and will generate a $23,500 §1231 loss on the sale. The second is land that will generate a
$13,900 §1231 gain on the sale. Aruna's ordinary marginal tax rate is 32 percent.
Note: Input all amounts as positive values.
b. Assuming that Aruna sells the land in December of year 1 and the machinery in January of year 2, what effect will the sales have on
Aruna's tax liability for each year?
Aruna's tax will
Aruna's tax will
decrease
increase
in year 1 by
in year 2 by
$
$
7,520
2,085
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Aruna, a sole proprietor, wants to sell two assets that she no longer needs for her business. Both assets qualify as §1231 assets. The first is machinery and will generate a $23,500 §1231 loss on the sale. The second is land that will generate a $13,900 §1231 gain on the sale. Aruna's ordinary marginal tax rate is 32 percent. Note: Input all amounts as positive values. b. Assuming that Aruna sells the land in December of year 1 and the machinery in January of year 2, what effect will the sales have on Aruna's tax liability for each year? Aruna's tax will Aruna's tax will decrease increase in year 1 by in year 2 by $ $ 7,520 2,085
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