Umair sold some equipment he used in his business on August 29, 2016, that was originally purchased for $70,000 on November 21, 2015. The equipment was depreciated using the 7-year MACRS method for a total of $18,574. Assume there is no additional netting of gains and losses for this taxpayer.
a. Assume Umair sold the equipment for $50,000:
(1) What is the amount of realized gain or loss on the sale of the equipment?
(2) Is the nature of the gain or loss considered ordinary or long-term?
b. Assume Umair sold the equipment for $60,000:
(1) What is the amount of realized gain or loss on the sale of the equipment?
(2) Is the nature of the gain or loss considered ordinary or long-term?