Martone Corporation Sells Two Machines and a Warehouse It Has

question 25

Multiple Choice

Martone Corporation sells two machines and a warehouse it has been using for storage in the current tax year.Each of the machines cost $25,000 and has an adjusted basis of $11,000 when each was sold for $14,000.The warehouse cost $105,000, has an adjusted basis of $60,000 and is sold for $95,000.All assets were depreciated using MACRS depreciation.What is the amount and type of gain recognized by Martone on the sale of these assets?

• A)$6,000 Section 1245 recapture; $35,000 Section 1231 gain
• B)$6,000 Section 1245 recapture; $7,000 Section 291 recapture; $28,000 Section 1231 gain
• C)$6,000 section 1245 recapture; $35,000 Section 291 recapture
• D)$41,000 capital gain

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Definitions:

Economies Of Scale

Reductions in per unit costs achieved through increased levels of production.

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Referring to markets or industries where multiple firms exist in competition with one another, ensuring no single entity controls the market prices or supply.

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