Andrew, an Individual, Began Business Four Years Ago and Has

Essay

Andrew, an individual, began business four years ago and has never sold a §1231 asset.Andrew owned each of the assets for several years.In the current year, Andrew sold the following business assets:
$$\begin{array} { l r r r r } &&{ \text { Accurnulated } }\\\text { Asset } & \text { Original Cost } &\text { Depreciation } & \text { Gair/Loss } \\\text { Machinery } & \$ 12,000 & \$ 7,000 & \$ 6,000 \\\text { Furniture } & 10,000 &2,00 0 & 3,000 \\\text { Building } & 90,000 & 20,000 & ( 5,000 )\end{array}$$ Assuming Andrew's marginal ordinary income tax rate is 32 percent, what is the character of the gains and losses and what affect do they have on Andrew's tax liability?