Question 1 Andrea owns a small company that produces facial masks. Thanks to COVID-19, her business was booming at the beginning of 2020. But by the end of 2022, since the need for facial masks is no longer there, Andrea decided to close her business. The first step to closing her business involves selling off business assets.

Below are her assets transaction info Assets Purchased Date Cost Sold date Sold price

Furniture 2/14/21 20k 12/31/22 10k

Equipment 2/1/21 100k 12/31/22 20k

Warehouse 1/1/21 50k 12/31/22

55k Land 1/1/21 150k 12/31/22 200k

NOTE: Assume there is no 179 and Bonus depreciation. Use MACRS only for depreciation Calculate the total accumulated depreciation of each asset until the sold date (12/31/22). Hint: Review Class 15 material

Calculate the Adjusted basis for each asset

Calculate the Gain/Loss Recognized for each asset.

Point out the exact character of gain/loss for each asset gain/loss (ex: Ordinary, pure 1231, 1245, 1250, etc.)

Calculate the Net 1231 Gain/Loss Hint: Be aware of 1245 Depreciation recapture and 1231 lookback rules

Characterize the gain from the whole 4 transactions into 2 categories: Total Ordinary Gain & Total LTCG