This year, Sigma, Incorporated generated $612,000 income from its routine business operations. In addition, the corporation sold thefollowing assets, all of which were held for more than 12 months:Marketable securitiesProduction equipmentBusiness realty:LandBuildingInitial Basis$ 144,00093,000165,000200,000AccumulatedDepreciation*$076,000058,300Sale Price$ 64,00030,000180,000210,000*Through date of sale.Required:a. Compute Sigma’s taxable income assuming that it used the straight-line method to calculate depreciation on the building and hasno nonrecaptured Section 1231 losses.b. Recompute taxable income assuming that Sigma sold the securities for $150,000 rather than $64,000.

INTRODUCTION:Taxable income is any remuneration received by an individual or corporation that is used to calculate tax liabilities. The total income amount, also known as gross income, is used to compute how much the individual or company owes the government for the tax period in question.SOLUTION:Part (a) Taxable Income (using Straight-Line Method):ParticularAmountIncome from Routine Business Operations$612,000Less: Sale Price of Marketable Securities$64,000Less: Sale Price of Production Equipment$30,000Less: Sale Price of Land$180,000Less: Sale Price of Building$210,000Add: Accumulated Depreciation of Building$58,300Taxable Income$1,86,300Part (b) Taxable Income (using Sale Price of $150,000):ParticularAmountIncome from Routine Business Operations$612,000Less: Sale Price of MarketLess: Sale Price of Production Equipment$30,000Less: Sale Price of Land$180,000Less: Sale Price of Building$210,000Add: Accumulated Depreciation of Building$58,300Taxable Income$100,300Therefore,a. Taxable Income (using Straight-Line Method): $1,86,300b. Taxable Income (using Sale Price of $150,000): $100,300a. Taxable Income (using Straight-Line Method): $1,86,300b. Taxable Income (using Sale Price of $150,000): $100,300