Please show your work!
AJ started a small business a year ago (i.e., this is the SECOND year of operations). He purchased the following assets to use in the business: In addition to the above assets that are used in the business, AJ purchased 1,000 shares of stock to be held as an investment for the business. He paid $15,000 for the stock. The estimated market value of the stock as of 12/31/2 is $10,000. AJ always elects to maximize deductions whenever possible. The estimated operating income from the business in x2 is $85,000. AJ's tax rate on ordinary income is 37% and all capital gains are taxed at 15%. AJ has decided to begin a new career and, therefore, intends to sell all of the assets in his business (on 12/31/2 ). Answer ALL SIX of the following questions. You may use tax year 2022 limits/deduction amounts where needed. You may IGNORE BONUS DEPRECIATION for the entirety of the case, but do NOT ignore Section 179 (hint). If you decide to handwrite your answers (which is perfectly fine!), PLEASE write NEATLY! If I can't read your answer, you don't get credit. 5. What is AJ'S CHANGE IN TAXABLE INCOME FROM SELLLING THE BUSINESS ASSETS? You MUST use the netting process chart that we discussed in class or you will NOT be given credit for this part, even if you calculate the correct answer. Change in Taxable Income = Page 3 of 4 AJ started a small business a year ago (i.e., this is the SECOND year of operations). He purchased the following assets to use in the business: In addition to the above assets that are used in the business, AJ purchased 1,000 shares of stock to be held as an investment for the business. He paid $15,000 for the stock. The estimated market value of the stock as of 12/31/2 is $10,000. AJ always elects to maximize deductions whenever possible. The estimated operating income from the business in x2 is $85,000. AJ's tax rate on ordinary income is 37% and all capital gains are taxed at 15%. AJ has decided to begin a new career and, therefore, intends to sell all of the assets in his business (on 12/31/2 ). Answer ALL SIX of the following questions. You may use tax year 2022 limits/deduction amounts where needed. You may IGNORE BONUS DEPRECIATION for the entirety of the case, but do NOT ignore Section 179 (hint). If you decide to handwrite your answers (which is perfectly fine!), PLEASE write NEATLY! If I can't read your answer, you don't get credit. 5. What is AJ'S CHANGE IN TAXABLE INCOME FROM SELLLING THE BUSINESS ASSETS? You MUST use the netting process chart that we discussed in class or you will NOT be given credit for this part, even if you calculate the correct answer. Change in Taxable Income = Page 3 of 4
