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Required information Problem 11-50 (LO 11-5) (Algo) [The following information applies to the questions displayed below.] Aruna, a sole proprietor, wants to sell two
Required information Problem 11-50 (LO 11-5) (Algo) [The following information applies to the questions displayed below.] 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 $34,750 1231 loss on the sale. The second is land that will generate a $8,500 1231 gain on the sale. Aruna's ordinary marginal tax rate is 32 percent. Note: Input all amounts as positive values. b. 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? Aruna's tax will increase in year 1 by $ 1,120 Aruna's tax will decrease in year 2 by $ 3,200
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