Summer 2022 15. Basham Company operates as a sole proprietorship and purchased $444,000 of new machinery on April 5, 2022, to be used in their assembly line. Basham's net income before deducting depreciation is $380,000. If Basham elects Section 179 on the machinery, how much of a depreciation deduction is allowed in 2022? a. $0 b. $88,800 c. $380,000 d. $444,000 16. Of the following, which is most commonly classified as a capital asset? a) Accounts receivable b) Publicly traded stock c) Inventory d) Office building used in a trade or business owned for 3 months 17. How are the gains and losses from the sale of Section 1231 assets taxed? (Disregard depreciation recapture rules.) 6606 Net Section 1231 Gains Net Section 1231 Losses capital capital ordinary ordinary capital ordinary ordinary capital 18. Choose the Section 1245 asset. Assume all assets are used in business. a) Accounts Receivables held for less than 60 days b) Certificate of Deposit held for 24 months c) Parking lot held of 5 years d) Concrete truck held for 2 years 19. Calvin sold a backhoe used in his landscaping business for $5,000. He owned the backhoe for 3 years. The original purchase price was $7,000. Calvin had taken $4,000 in depreciation expense. Determine how the gain or loss will be taxed. a) $2,000 long-term capital gain b) $2,000 ordinary income c) $4,000 ordinary income d) $5,000 long-term capital gain