T is a self-employed physician, During the year, he had $300,000 income from his practice, and a $15,000 gain on the sale of equipment used in his business. As result of the above, T has which of the following?
A) $300,000 self-employment income and $15,000 Category 1 income.
B) $300,000 self-employment income and no Category 3 gain.
C) $315,000 self-employment income and a $15,000 Category 3 gain.
D) $315,000 self-employment income and $15,000 category 2 income.
Here we can easily get that the total income earned by him treared as the self employed income as the law described about it as follows,
If any specific business asset sold and get gain on such sales treared as ordinary gain and must be included in ordinary income instead of showing it as seperate category income,
Business assets included equipment,furniture and fixures and company owned vehicles where specific business assets are stated. And fall on category2 (bracket 2 rates stated as 0%,15%,20%.the given question falls under caregory2 because longterm capital asset and falls in 0%category(as $15000<$39,375)refer rules under tax laws of federal government.
That is the reason here stated specifically selling of equipment is included in ordinary business income ,as well as under category2 income.
Hence answer is "D"
T is a self-employed physician, During the year, he had $300,000 income from his practice, and...
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