Question
Bob owns a farming sole proprietorship. During the year, Bob sold a milk cow that he had owned for 15 months and a workhorse that
Bob owns a farming sole proprietorship. During the year, Bob sold a milk cow that he had owned for 15 months and a workhorse that he had owned for 66 months. The cow had an adjusted basis of $38,000 and was sold for $55,000. The horse had an adjusted basis of $750 and was sold for $4,000. Bob also has a $200 long-term capital loss from the sale of corporate stock. He has $55,000 of other AGI (not associated with the items above) for the year. He has $4,000 nonrecaptured 1231 losses from the previous five years.
The sale of the milk cow results in an ordinary gain of $ _______. Although the sale of the workhorse results in a 1231 gain of $______, due to the 1231 lookback rule , the amount is reclassified as ordinary gain . Therefore, Bob's AGI for the year is $________.
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