PLEASE ANSWER ALL PARTS FOR A THUMBS UP RATING!

1. In 2018 you paid $1 million for a new widget-making machine for your widget-making business. Today, having decided that you need a bigger / faster machine, you sold the used 2018 machine for $500,000.

Now assume that, for the years 2018, 2019, and 2020 through the date of sale, you have or will have claimed exactly $600,000 of depreciation deductions related to your $1 million investment in the 2018 machine. What, if any, income will you report based on this sale, and why?

2. Youre a 40% shareholder of ABC, Inc., an S corporation. ABCs ordinary business income for 2019 was exactly $100,000. ABC distributed $20,000 to you in your capacity as a shareholder during 2019. On your 2019 Form 1040, you will report ___ of gross income from ABC. Why is that the correct amount?

3. Same as (3) above except that ABC is a regular corporation i.e., not an S corporation. On your 2019 Form 1040, you will report ___ of gross income from ABC. Why is that the correct amount?