McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 45

Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley owned each of the assets for several years. In the current year, Buckley sold the following business assets:
Assuming Buckley's marginal ordinary income tax rate is 35 percent, answer the questions for the following alternative scenarios:
a. What are Buckley's gains or losses for the current year What effect do the gains or losses have on Buckley's tax liability
b. Assume that the amount realized increased so that the building was sold at a $6,000 gain instead. What are Buckley's gains or losses for the current year What effect do the gains and losses have on Buckley's tax liability
c. Assume that the amount realized increased so that the building was sold at a $15,000 gain instead. What are Buckley's gains or losses for the current year What effect do the gains and losses have on Buckley's tax liability