In August 2017 Suzanne purchased office equipment used in her trade or business. The equipment is treated as 5-year property for tax purposes. She paid $40,000 cash, signed a promissory note for $12,000, and assumed liability on the asset of $3,000. In addition, she paid $500 for installation and $800 for freight and delivery costs. On June 10, 2020, she sold the equipment for $40,000. Assume Accumulated MACRS depreciation on the date of sale was $29,276. Compute the gain or loss on the sale of the equipment. Compute the Section 1245 recapture amount and the Section 1231 Gain for tax purposes. Show supporting computations.

Realized Gain or Loss on the Sale

Section 1245 Recapture Amount

Section 1231 Gain