What is the tax status of the equipment

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Question - Bruce receives an inheritance in 2017 of equipment. The equipment was used in his business and depreciated by his now deceased father, and Bruce will also depreciate it while using it in his trade or business. At the date of his father's death, the equipment had a fair market value of $425,000. His father had purchased it for $680,000 and had taken $328,000 of depreciation on the equipment. Bruce takes $232,000 of depreciation on the equipment before selling it for $275,000 in 2020.

-What is the tax status of the equipment (character of the property - i.e., inventory, capital asset, §1231 asset, etc.),

-How much is his gain, and

-What is the nature of the gain when Bruce sells the equipment (capital gain, ordinary income, etc.)?

Reference no: EM133001510

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