ACCT 407 607 Federal Taxation Chapter 14 Example Michael had the following sales of assets in 2021 Assume all fixed assets and land were use in a trade or business The Accumulated Depreciation column reflects the correct depreciation through the date of sale Calculate Michael's income for the year and indicate its character Michael had a net 1231 loss in 2014 of $4,000, a net 1231 loss of $5,000 in 2018, net 1231 income of $3,000 in 2019 Adjusted Basis Gain (Loss) GE Stock Computer Rocket Launcher Tank 1 Building 1 Land Tank 2 Equipment 2 Boeing Stock Date Placed in Service 5 8 20 2 22 19 6 28 18 7 17 20 8 1 06 8 16 97 10 1 20 8 11 18 8 26 98 Date Sold 3 3 21 5 16 21 6 16 21 4 17 21 5 1 21 5 11 21 7 8 21 1 15 21 5 11 21 Initial Basis 34,000 3,000 14,500 27,000 140,000 40,000 80,000 9,500 15,000 Accum Depreciation N A 2,600 10,200 21,000 14,000 N A 1,500 5,200 N A Sale Price 21,000 1,500 17,500 3,800 132,000 68,000 80,000 3,700 24,000 Ordinary Income or (Loss) Section 1231 Gain or (Loss) Capital Gain or (Loss) GE Stock Computer Rocket Launcher Tank 1 Building 1 Land Tank 2 Equipment 2 Boeing Stock ACCT 407 607 Federal Taxation Chapter 14 Example Michael had the following sales of assets in 2021 Assume all fixed assets and land were use in a trade or business The Accumulated Depreciation column reflects the correct depreciation through the date of sale Calculate Michael's income for the year and indicate its character Michael had a net 1231 loss in 2014 of $4,000, a net 1231 loss of $5,000 in 2018, net 1231 income of $3,000 in 2019 Adjusted Basis Gain (Loss) GE Stock Computer Rocket Launcher Tank 1 Building 1 Land Tank 2 Equipment 2 Boeing Stock Date Placed in Service 5 8 20 2 22 19 6 28 18 7 17 20 8 1 06 8 16 97 10 1 20 8 11 18 8 26 98 Date Sold 3 3 21 5 16 21 6 16 21 4 17 21 5 1 21 5 11 21 7 8 21 1 15 21 5 11 21 Initial Basis 34,000 3,000 14,500 27,000 140,000 40,000 80,000 9,500 15,000 Accum Depreciation N A 2,600 10,200 21,000 14,000 N A 1,500 5,200 N A Sale Price 21,000 1,500 17,500 3,800 132,000 68,000 80,000 3,700 24,000 Ordinary Income or (Loss) Section 1231 Gain or (Loss) Capital Gain or (Loss) GE Stock Computer Rocket Launcher Tank 1 Building 1 Land Tank 2 Equipment 2 Boeing Stock

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ACCT 407 607   Federal Taxation Chapter 14 Example Michael had the following sales of assets in 2021  Assume all fixed assets and land were use in a trade or business  The Accumulated Depreciation column reflects the correct depreciation through the date of sale  Calculate Michael's income for the year and indicate its character  Michael had a net 1231 loss in 2014 of $4,000, a net 1231 loss of $5,000 in 2018, net 1231 income of $3,000 in 2019  Adjusted Basis Gain (Loss) GE Stock Computer Rocket Launcher Tank  1 Building  1 Land Tank  2 Equipment  2 Boeing Stock Date Placed in Service 5 8 20 2 22 19 6 28 18 7 17 20 8 1 06 8 16 97 10 1 20 8 11 18 8 26 98 Date Sold 3 3 21 5 16 21 6 16 21 4 17 21 5 1 21 5 11 21 7 8 21 1 15 21 5 11 21 Initial Basis 34,000 3,000 14,500 27,000 140,000 40,000 80,000 9,500 15,000 Accum  Depreciation N A 2,600 10,200 21,000 14,000 N A 1,500 5,200 N A Sale Price 21,000 1,500 17,500 3,800 132,000 68,000 80,000 3,700 24,000 Ordinary Income or (Loss) Section 1231 Gain or (Loss) Capital Gain or (Loss) GE Stock Computer Rocket Launcher Tank  1 Building  1 Land Tank  2 Equipment  2 Boeing Stock ACCT 407 607   Federal Taxation Chapter 14 Example Michael had the following sales of assets in 2021  Assume all fixed assets and land were use in a trade or business  The Accumulated Depreciation column reflects the correct depreciation through the date of sale  Calculate Michael's income for the year and indicate its character  Michael had a net 1231 loss in 2014 of $4,000, a net 1231 loss of $5,000 in 2018, net 1231 income of $3,000 in 2019  Adjusted Basis Gain (Loss) GE Stock Computer Rocket Launcher Tank  1 Building  1 Land Tank  2 Equipment  2 Boeing Stock Date Placed in Service 5 8 20 2 22 19 6 28 18 7 17 20 8 1 06 8 16 97 10 1 20 8 11 18 8 26 98 Date Sold 3 3 21 5 16 21 6 16 21 4 17 21 5 1 21 5 11 21 7 8 21 1 15 21 5 11 21 Initial Basis 34,000 3,000 14,500 27,000 140,000 40,000 80,000 9,500 15,000 Accum  Depreciation N A 2,600 10,200 21,000 14,000 N A 1,500 5,200 N A Sale Price 21,000 1,500 17,500 3,800 132,000 68,000 80,000 3,700 24,000 Ordinary Income or (Loss) Section 1231 Gain or (Loss) Capital Gain or (Loss) GE Stock Computer Rocket Launcher Tank  1 Building  1 Land Tank  2 Equipment  2 Boeing Stock

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ACCT 407/607 - Federal Taxation Chapter 14 Example Michael had the following sales of assets in 2021. Assume all fixed assets and land were use

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