A business taxpayer sold all the depreciable assets of the business, calculated the gains and losses, and would like to know the final character of those gains and losses. The taxpayer had $353,000 of adjusted gross income before considering the gains and losses from sale of the business assets. The taxpayer had unrecaptured 1231 lookback loss of $12,000. (15 points)

Asset	Purchase Date	Sale Date	Depreciation	Gain (Loss)
Machine #1	10/10/16	11/11/18	$323,000	$66,000
Machine #2	10/02/16	11/11/18	65,000	(15,000)
Machine #3	09/23/14	11/11/18	183,000	23,000
Machine #4	09/23/14	11/11/18	28,000	64,000

Answer each of the following questions. Be sure to show and label all calculations.

1. Identify the initial classification/type of the gain or loss for each machine.
2. What is the treatment of the gains and losses summarized in the chart below after all possible netting and reclassification has been completed?
3. What is the taxpayers adjusted gross income (AGI)?
4. Specify whether ordinary or preferential rates apply to each component of AGI.