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sweet-ann [11.9K]
3 years ago
5

Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several year ago and has a claimed $1

2,5000 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?
a. 7,500 section 1231 loss
b. $7,500 section 1231 gain
c. $7,500 ordinary gain
d. 7,500 capital gain
e. none of these
Business
1 answer:
pishuonlain [190]3 years ago
6 0

Answer:

c. $7,500 ordinary gain  

Explanation:

Depreciated value of Machine = $55,000 - $12,500  

                                                   = $ 42,500

Sale price of Machine = $ 50,000

Gain on sale of Asset = $ 50,000 - $ 42,500

                                    = $ 7,500

Therefore, The amount and character of Butte's gain or loss is $7,500 ordinary gain.  

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