Question
Brandon, an individual, began business four years ago as a sole proprietorship and has sold 1231 assets resulting in $6,000 of unrecaptured losses within the
Brandon, an individual, began business four years ago as a sole proprietorship and has sold 1231 assets resulting in $6,000 of unrecaptured losses within the last 5 years. In the current year, Brandon sold the following business assets. All of these assets were placed in service more than one year ago.
Asset | Original Cost | Accumulated Depreciation | Gain/Loss |
Machinery | $ 30,000 | $ 7,000 | $ 10,000 |
Land | $ 40,000 | $ 0 | ($5,000) |
Building | $ 90,000 | $ 30,000 | $20,000 |
Hint: This is not a corporation (so Sec. 291 will not apply). See pages 11-14 through 11-16 of the e-text (or textbook) to see how Sec. 1250 gains are taxed for individuals.
What is the amount of depreciation recapture on these sales? [ Select ] ["$14,000", "$16,000", "$7,000"]
What is the character of the $25,000 net gain?
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