Mary Martin owns a custom curtain/ drapery business. In 2018, she purchased three new sewing machines and

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Mary Martin owns a custom curtain/ drapery business. In 2018, she purchased three new sewing machines and in a separate transaction, sold her three old machines for \(\$ 6,000\). She had bought the old machines for \(\$ 5,000\) and had properly claimed depreciation of \(\$ 3,000\). What is the amount and character of Mary's gain?

a. \(\$ 0\) ordinary gain and \(\$ 4,000\) Section 1231 gain

b. \(\$ 2,000\) ordinary gain and \(\$ 4,000\) Section 1231 gain

c. \(\$ 3,000\) ordinary gain and \(\$ 1,000\) Section 1231 gain

d. \(\$ 4,000\) ordinary gain and \(\$ 0\) Section 1231 gain

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CCH Federal Taxation 2019 Comprehensive Topics

ISBN: 9780808049081

2019 Edition

Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback

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