8. Alejandro purchased a building in 1985, which he uses in his manufacturing business. Alejandro used the ACRS statutory rates to determine the costrecovery deduction for the building. Alejandro's original cost for the building is $500,000 and costrecovery deductions allowed are $500,000. If the building is sold for $800,000, the tax results to Alejandro are

Part 1

A.

$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1231 gain.

B.

$800,000 Sec. 1245 ordinary income.

C.

$500,000 Sec. 1245 ordinary income and $300,000 Sec. 1250 income.

D.

$800,000 Sec. 1231 gain.

9. John has $55,000 of selfemployment earnings from a sole proprietorship. John is also employed parttime

by a major corporation and is paid $25,000. John's selfemployment tax for 2020 is

Part 1

A.

$8,415.

B.

$7,771.

C.

$4,208.

D.

$3,886.