On August 1 of year 0, Dirksen purchased a machine for $41,250 to use in its business. On December 4 of year 0, Dirksen sold the machine for $35,500. Use MACRS Table:

a. What is the amount and character of the gain or loss Dirksen will recognize on the sale?

b. What is the amount and character of the gain or loss Dirksen will recognize on the sale if the machine is sold on January 15 of year 1 instead?

20-Year 3.750% 7.219 6.677 6.177 5.713 5.285 4.888 4.522 4.462 Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% Year 2 44.45 32.00 24.49 18.00 9.50 Year 3 14.81 19.20 17.49 14.40 8.55 Year 4 7.41 11.52 12.49 11.52 7.70 Year 5 11.52 8.93 9.22 6.93 Year 6 5.76 8.92 7.37 6.23 Year 7 8.93 6.55 5.90 Year 8 4.46 6.55 5.90 Year 9 6.56 5.91 Year 10 6.55 5.90 Year 11 3.28 5.91 Year 12 5.90 Year 13 5.91 Year 14 5.90 Year 15 5.91 Year 16 2.95 Year 17 Year 18 Year 19 Year 20 Year 21 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 Amount Description Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) $1231 gain/loss) Amount Description Total Gain/(Loss) Recognized Character of Recognized Gain/(Loss): Ordinary Gain/(Loss) $1231 gain/(loss)