Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since he began the business. In the current year, Buckley sold the following business assets:

Assuming Buckley€™s marginal ordinary income tax rate is 32 percent, answer the questions for the following alternative scenarios:
a. What is the character of Buckley€™s gains or losses for the current year? What effect do the gains and losses have on Buckley€™s tax liability?
b. Assume that the amount realized increased so that the building was sold at a $6,000 gain instead. What is the character of Buckley€™s gains or losses for the current year? What effect do the gains and losses have on Buckley€™s tax liability?

c. Assume that the amount realized increased so that the building was sold at a $15,000 gain instead. What is the character of Buckley€™s gains or losses for the current year? What effect do the gains and losses have on Buckley€™s tax liability?

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Accumulated Original Cost Gain/Loss Asset Depreciation $ 6,000 $ 2,000 4,000 12,000 10,000 Computers Machinery Furniture Building $(3,000) 10,000 20,000 100,000 7,000 (1,000)