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

Exercise 34

Alisha, who is single, owns a sole proprietorship in which she works as a management consultant.She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks.She purchased the home at the beginning of year 1 for $400,000.Since she purchased the home and moved into it she has been able to deduct $10,000 of depreciation expenses to offset her consulting income.At the end of year 3, Alisha sold the home for $500,000.What is the amount of taxes Alisha will be required to pay on the gain from the sale of the home? Alisha's ordinary marginal tax rate is 30 percent.