Question
In the current year, Henry, a sole proprietor, sold for $65,000 a machine that was used in his business. The machine had been purchased in
In the current year, Henry, a sole proprietor, sold for $65,000 a machine that was used in his business. The machine had been purchased in a few years ago for $50,000, and when it was sold, it had accumulated depreciation of $20,000 and an adjusted basis of $30,000. For the current year, how should this gain be treated?
A. Ordinary income of $35,000
B. Section 1231 gain of $20,000 and ordinary income of $15,000
C. Section 1231 gain of $15,000 and ordinary income of $20,000
D. Section 1231 gain of $35,000
E. None of these choices are correct.
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
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