What is the amount and character of the recognized gain

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Question - Sylva transfers to Leaf Corporation a machine she had purchased a year ago for $50,000. The machine has a $40,000 adjusted basis and a $55,000 FMV on the transfer date. $10,000 in depreciation was claimed by Silvia prior to the transfer. Silvia receives all 1,000 shares of Leaf Corporation stock worth $55,000 and a two-year note with a $5,000 FMV. What is the amount and character of the recognized gain or loss?

A) $15,000 ordinary income

B) $15,000 capital gain

C) $5,000 ordinary income

D) $5,000 capital gain

Reference no: EM131818434

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