Lily Tucker (single) owns and operates a bike shop as a sole proprietorship. In 2018, she sells the following long-term assets used in her business:
|Asset||Sales Price||Cost||Accumulated Depreciation|
Lily's taxable income before these transactions is $164,700.
What are Lily's taxable income and tax liability for the year? Use Tax Rate Schedule for reference. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Income before sale of assets = $164700
Calculation of capital gains :
Building= selling price - cost - depreciation allowed
=$234200-$204200-$56200 = -$26200 is loss.
Equipment = $84200-$152200-$27200 = -$95200 ie loss.
Total loss = $121400
Tax amount= $32089.5+32% of income over $157500
Capital loss =$121400 is not allowed to setofff against normal income,hence carried forward.
Taxable income is $164700.
Taxliability is $34393.5.
Get Answers For Free
Most questions answered within 1 hours.