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What effect will the sales have on aruna tax liability

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Aruna, a sole proprietor, wants to sell two assets that she no longer needs for her business. Both assets qualify as §1231 assets. The first is machinery and will generate a $14,100 §1231 loss on the sale. The second is land that will generate a $10,500 §1231 gain on the sale. Aruna's ordinary marginal tax rate is 32 percent. (Input all amounts as positive values.)

Question 1: Assuming that Aruna sells the land in December of year 1 and the machinery in January of year 2, what effect will the sales have on Aruna's tax liability for each year?

Reference no: EM132843647

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