Reference no: EM132703115
Problem - Gary Farmer had the following sales of business property during the 2018 tax year:
1. Sold land acquired on December 3, 2007, at a cost of $24,000, for $37,000 on January 5, 2018. The cost of selling the land was $500, and there was no depreciation allowable or capital improvements made to the asset over the life of the asset.
Calculate Gary's net gain or loss and determine the character as either capital or ordinary (ignore any depreciation recapture).
2. Sold a business computer with an adjusted basis of $20,700 that was acquired on April 5, 2015. The original cost was $25,875, and accumulated depreciation was $5,175. The computer was sold on May 2, 2018, for $14,000, resulting in a $6,700 loss.
Calculate Gary's net gain or loss and determine the character as either capital or ordinary (ignore any depreciation recapture).
3. Sold equipment on July 22, 2018 for gross proceeds of $16,000. The equipment was acquired on October 21, 2017 at a cost of $25,000 and accumulated depreciation was $4,300 at the time of the sale. Gary used an equipment broker on this sale and paid a sales commission of $1,600.
Calculate Gary's net gain or loss and determine the character as either capital or ordinary (ignore any depreciation recapture).
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