Answer Happy

Emily, an individual, began business four years ago and has never sold a Section 1231 asset. Emily owned each of the assets for several years. In the current year, Emily sold the following business assets. Asset Original Cost Gain/Loss Machinery Computers Building $32,000 $12,000 $120,000 Accumulated Depreciation $7,300 $5,000 $24,000 $10,500 $(2,400) $(3,000) Assume Emily's marginal ordinary income tax rate is 32%. a. Determine the character of each gain and loss. (4 points) b. Complete the Section 1231 netting process and determine net section 1231 gain or loss and its final character. (3 points) c. Determine Emily's tax liability or tax savings for the year. (3 points)