Reference no: EM132462268
Problem - A taxpayer purchased business machinery on February 16, 2017, for $25,000. The machinery was sold for $26,000 on November 10, 2018. Depreciation information is as follows: Accelerated depreciation taken $9,000 Straight-line depreciation (7-year life) would have been 5,000.
Required - What is the gain or loss on the sale of this machinery, and how will it be treated on the tax return?
a. $4,000 ordinary income and $6,000 Section 1231 gain
b. $4,000 ordinary income and $6,000 long-term capital gain
c. $9,000 ordinary income and $1,000 Section 1231 gain
d. $9,000 ordinary income and $1,000 long-term capital gain
e. None of the above.
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What is the gain or loss on the sale of this machinery
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