Albert's sole proprietorship owns the following assets:

* Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Albert sells his sole proprietorship for $500,000.Calculate Albert's recognized gain or loss and classify it as capital or ordinary.
A)$230,000 ordinary income.
B)$230,000 capital gain.
C)$115,000 ordinary income and $115,000 capital gain.
D)$110,000 ordinary income and $120,000 capital gain.
E)None of the above.

Question

Albert's sole proprietorship owns the following assets:

* Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Albert sells his sole proprietorship for $500,000.Calculate Albert's recognized gain or loss and classify it as capital or ordinary.
A)$230,000 ordinary income. 
B)$230,000 capital gain. 
C)$115,000 ordinary income and $115,000 capital gain. 
D)$110,000 ordinary income and $120,000 capital gain. 
E)None of the above.

Quizplus · Accepted Answer

The Answer of Albert's sole proprietorship owns the following assets:

* Potential § 1245 recapture of $45,000.
** Straight-line depreciation was used.
Albert sells his sole proprietorship for $500,000.Calculate Albert's recognized gain or loss and classify it as capital or ordinary.
A)$230,000 ordinary income. 
B)$230,000 capital gain. 
C)$115,000 ordinary income and $115,000 capital gain. 
D)$110,000 ordinary income and $120,000 capital gain. 
E)None of the above.

Albert's Sole Proprietorship Owns the Following Assets