Performance Industries, Inc. sold three pieces of equipment and a small building on March 1, year 6. Data on these disposals are as follows:

MACHINE COST DATE ACQUIRED DEPRECIATION SELLING PRICE 1 $45,000 April 24, year 2 $35,000 $19,000 2 $105,000 May 2, year 1 $90,000 $24,000 3 $63,000 June 4, year 4 $12,000 $66,000 Building $400,000 April 30, year 1 $45,000 $425,000

a. What is the amount and character of the gain or loss on each of these assets?

b. What is the sum of each type of gain or loss and the net effect these gains/losses have on Performance Industries’ net income?

c. How would your answer change if Performance Industries had $6,000 of Section 1231 losses in year 3?

AppendixLO1