A taxpayer is a wholesaler who uses a forklift in his business.

On 1 October 2019 he purchased a new forklift with an effective life of five years.

To acquire the forklift, he traded in his old forklift that had a market value on the date of disposal of $2,000. The cost of the old forklift was $6,000 when purchased a number of years ago and it had an adjustable value of $1,000 on the date it was sold.

What is the balancing adjustment on the disposal of the old forklift in the current year, assuming that the taxpayer is not using the Small Business Entity (SBE) method for depreciation?

Select one:

a. $1,200 deductible

b. $4,000 assessable

c. $3,000 assessable

d. $1,000 assessable