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

Multiple Choice

Brandon, an individual, began business four years ago and has sold §1231 assets with $5,550 of losses within the last five years. Brandon owned each of the assets for several years. In the current year, Brandon sold the following business assets: Assuming Brandon's marginal ordinary income tax rate is 32 percent, what effect do the gains and losses have on Brandon's tax liability? Use dividends and capital gains tax rates for reference.

A) $20,050 ordinary income and $6,416 tax liability.
B) $20,050 §1231 gain and $3,008 tax liability.
C) $6,400 §1231 gain, $13,650 ordinary income, and $5,328 tax liability.
D) $13,650 §1231 gain, $6,400 ordinary income, and $4,096 tax liability.
E) None of the choices are correct.