4- Brandon, an individual, began business four years ago and has sold 1231 assets with $5,850 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:

Asset	Original Cost		Accumulated Depreciation		Gain/Loss
Machinery	$	31,700	$	8,700	$	10,850
Land		57,000		0		28,500
Building		124,000		37,000		(22,000	)

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- $17,350 1231 gain and $2,603 tax liability.

b- $14,550 1231 gain, $2,800 ordinary income, and $3,079 tax liability.

c- $2,800 1231 gain, $14,550 ordinary income, and $5,076 tax liability.

d- None of the choices are correct.

e- $17,350 ordinary income and $5,552 tax liability.

Tax Rates for Net Capital Gains and Qualified Dividends

Rate*	Taxable Income
	Married Filing Jointly	Married Filing Separately	Single	Head of Household	Trusts and Estates
0%	$0 - $78,750	$0 - $39,375	$0 - $39,375	$0 - $52,750	$0 - $2,650
15%	$78,751 - $488,850	$39,376 - $244,425	$39,376 - $434,550	$52,751 - $461,700	$2,651 - $12,950
20%	$488,851+	$244,426+	$434,551+	$461,701+	$12,951+

*This rate applies to the net capital gains and qualified dividends that fall within the range of taxable income specified in the table (net capital gains and qualified dividends are included in taxable income last for this purpose).