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 $22,500 1231 loss on the sale. The second is land that will generate a $7,400 1231 gain on the sale. Arunas ordinary marginal tax rate is 32 percent.(Input all amounts as positive values.)

a. Assuming she sells both assets in December of year 1 (the current year), what effect will the sales have on Arunas tax liability?

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 Arunas tax liability for each year?

Required information

[The following information applies to the questions displayed below.] Kase, an individual, purchased some property in Potomac, Maryland, for $152,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kases Maryland property. Kase agrees to the exchange. What is Kases realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios? (Loss amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)

a. The transaction qualifies as a like-kind exchange and the fair market value of each property is $710,000.

b. The transaction qualifies as a like-kind exchange and the fair market value of each property is $116,000.